Opposition Brief — Sun City Taxpayers' Ass'n v. Citizens Utilities Co.

Supreme Court, U.S.

\ FILED

MAR 16 1995

No. 94-1377

IN THE

Supreme Court of the Hnited States

OcTOBER TERM, 1994

Sun Crry TAXPAYERS’ ASSOCIATION,

Petitioner,

CITIZENS UTILITIES COMPANY,

Respondent.

ON PETITION FOR A WRIT OF CERTIORAF I

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

JAMES F. STAPLETON JOSEPH E. MAIs

Day, BERRY & HOWARD Counsel of Record

One Canterbury Green Lex J. SMITH

Stamford, CT 06901 ANTHONY L. M4RKS

(203) 977-7300 BROWN & BAIN, P.A.

2901 North Central Avenue

Post Office Box 400

Phoenix, AZ 85001

(602) 351-3000

Counsel for Respondent

Citizens Utilities Company

March 16, 1995

;

dip

QUESTIONS PRESENTED

1. Do this Court’s holdings in Warth v. Seldin, 422

U.S. 490 (1975), and Hunt v. Washington State Apple

Advertising Comm’n, 432 U.S. 333 (1977), permit an

organization standing to assert damage claims on behalf

of its members where the fact and amount of damages

would be particular to each member, and would require

individualized proof?

2. Does the filed rate doctrine announced in cases

such as Keogh v. Chicago & N.W. Ry., 260 U.S. 156

(1922), and Square D Co. v. Niagara Frontier Tariff

Bureau, Inc., 476 U.S. 409 (1986), apply to private civil

claims under the Racketeer Influenced and Corrupt

Organizations Act, 18 U.S.C. § 1964(c)?

-ii-

Rule 29.1 Statement

Citizens Utilities Company has no parent or

subsidiary corporations required to be listed under Rule

29.1 of this Court.

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Table of Contents

Page

I I no a nw ko os been e ee se wnaws iv

STATEMENT OF THE CASE ................. 1

REASONS FOR DENYING THE WRIT .......... 2

i. THE COURT OF APPEALS CORRECTLY

HELD THAT SCTA LACKED STANDING TO

SUE FOR RECOVERY OF MONETARY

LOSSES ALLEGEDLY SUSTAINED BY ITS

EO ee 3

Il. THE SECOND CIRCUIT’S HOLDING ON

THE STANDING ISSUE PRESENTS NO

CONFLICT AMONG THE CIRCUITS ....... 6

Il. THE COURT OF APPEALS CORRECTLY

HELD THAT THE FILED RATE DOCTRINE

ARTICULATED BY THIS COURT BARS

ee ls Wn a hk ek 8 46 4-9 3 6 8

IV. THE LOWER COURT’S APPLICATION OF

THE FILED RATE DOCTRINE TO RICO

CLAIMS PRESENTS NO CONFLICT

AMONG THE CIRCUITS AND IS

CONSISTENT WITH THIS COURT’S PRIOR

a 10

Se 14

-iv-

Table of Authorities

Cases: Page(s)

Arkansas La. Gas Co. v. Hall, 453 U.S. 571

CUEEL A. ts. so aon 4 ie ates oe atta ac atta 3, 8, 9, 1i

Associated Gen. Contractors, Inc. v. California

State Council of Carpenters, 459 U.S. 519

CN 5 bo ae ee es 13

County of Suffolk v. Long Island Lighting Co.,

OU7 FG 1FeO Gad Civ. 1900). 0. cree. 13

Cullum v. Arkla, Inc., 797 F. Supp. 725 (E.D.

Ark. 1992), aff'd mem., 994 F.2d 842 (8th

es eee aes oes eR ae ee ee ORR eR 11

General Tel. Co. v. Falcon, 457 U.S. 147 (1982) ..... 5

H.J. Inc. v. Northwestern Bell Tel. Co., 492

Oh ee eae a wo Pe RN ek ea ws 13

H.J. Inc. v. Northwestern Bell Tel. Co., 734

F. Supp. 879 (D. Minn. 1990 , aff'd, 954

F.2d 488 (8th Cir.), cert. denied, 112 S. Ct.

ee Cs a oo ee te Ss OR ae a ce 10, 13

Holmes v. Securities Investor Protection

Cowm., DES D. 4h. LGU CARD gcc ccc ccc eens 12

Hunt v. Washington State Apple Advertising

Comm’n, 482 U.S. 3383 (1977) ............ passim

Kansas Health Care Ass’n v. Kansas Dep’t of

Social & Rehab. Servs., 958 F.2d 1018 (10th

red te Wee Fe te 7

«-V-

Cases: Page(s)

Keogh v. Chicago & N.W. Ry., 260 U.S. 156

re res ee eee i, 8, 9,11, 12

Lifschultz Fast Freight, Inc. v. Consolidated

Freightways Corp., 805 F. Supp. 1277 (D.S.C.

1992), aff'd mem., 998 F.2d 1009 (4th Cir.),

cert, denied, 114 S. Ct. 553 (1993) ............. 10

Maislin Indus. v. Primary Steel, Inc., 497 US.

oe eeeererer eer ree Tarr eT Tere re 8, 9

Middlewest Motor Freight Bureau v. United

States, 525 F.2d 681 (8th Cir. 1975) ........... 6, 7

Montana-Dakota Utils. Co. v. Northwestern Pub.

Serv. Co., 341 U.S. 246 (1951) .......... 3, 8, 9, 11

National Commodity & Barter Ass’n v. Archer, 31

foe sR ge ee | eee Pere ere 6, 7

Neighborhood Action Coalition v. City of

Canton, 882 F.2d 1012 (6th Cir. 1989) ........... 6

New Beckley Mining Corp. v. International

Union, 18 F.3d 1161 (4th Cir. 1994) ............ 6

Powell v. Nevada, 114 S. Ct. 1280 (1994) .......... 3

Reves v. Ernst & Young, 113 S. Ct. 1163 (1993) ... 138

Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479

Car rm Aree On pe 13

Simer vu. Rios, 661 F.2d 655 (7th Cir. 1981),

cert. denied, 456 US. G17 CIGGR) kw cece 6

-vi-

Cases: Page(s)

Square D Co. v. Niagara Frontier Tariff Bureau,

Inc., 476 U.S. 409 (1986) ......... i, 3, 8, 9, 11, 12

Standardbred Owners Ass’n v. Roosevelt Raceway

Assocs., L.P., 985 F.2d 102 (2d Cir. 1993) ........ 7

Taffet v. Southern Co., 967 F.2d 1483 (11th

Cir.), cert. denied, 113 S. Ct. 657 (1992) ... 10,11, 12

Telecommunications Research & Action Ctr. ex

rel. Checknoff v. Allnet Communication

Servs., Inc., 806 F.2d 1093 (D.C. Cir. 1986) ..... 5, 6

Terre Du Lac Ass’n v. Terre Du Lac, Inc., 772

F.2d 467 (8th Cir. 1985), cert. denied, 475

a ERED nso cnceeveceavecvesesascees 6

United Steelworkers of Am. v. University of

Alabama, 599 F.2d 56 (5th Cir. 1979) ........... 6

United Union of Roofers uv. Insurance Corp. of

Am., 919 F.2d 1398 (9th Cir. 1990) ............. 6

Warth v. Seldin, 422 U.S. 490 (1975) ........ i, 1,2, 4

Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17 (2d

| 2, 10, 11, 14

Statutes and Rules:

ke ee ee ee er eee 1]

18 US.C. §1964(c) .................... i, 11, 12

a 8 2,3 |

eee Be GAP. FBR) nn ceric eccsteccecees 5

———————————

Respondent, Citizens Utilities Company (“Citizens”),

respectfully requests that this Court deny the petition for

writ of certiorari filed by petitioner, Sun City Taxpayers’

Association (“SCTA”).

STATEMENT OF THE CASE

SCTA filed this civil RICO action purportedly on

behalf of all “residents of Sun City, Arizona, who

purchased utility services” from Citizens’ subsidiaries.

SCTA alleged that Citizens engaged in RICO violations to

procure from the Arizona Corporation Commission (the

administrative body that regulates Arizona utilities)

higher utility rates than those to which it was entitled

under Arizona law. SCTA further alleged that Sun City

ratepayers were injured by paying these regulator-

approved (but inflated) rates, and demanded damages of

three times “the improper utility rates paid by” Sun City

ratepayers.

The District Court (then-Chief Judge José A.

Cabranes) granted Citizens’ motion to dismiss the

complaint on two grounds. 847 F. Supp. 281 (D. Conn.

1994). First, relying on this Court’s decisions in Warth v.

Seldin, 422 U.S. 490 (1975), and Hunt v. Washington State

Apple Advertising Comm’n, 432 U.S. 333 (1977), the

District Court held that SCTA lacked standing because it

did not allege injury to itself, and that it could not bring

an action for monetary damages on behalf of its members

because “individualized proof would be required both as to

whether the member was injured and the extent of any

such injury.” 847 F. Supp. at 285. Second, the District

Court held that SCTA’s RICO claims were barred because

the filed rate doctrine “prohibits a ratepayer from

recovering damages measured by comparing the filed rate

and the rate that might have been approved absent the

conduct in issue.” Jd. at 287-88.

The Court of Appeals unanimously affirmed the

District Court on both grounds. 45 F.3d 58 (2d Cir. 1995).

-2-

The Second Circuit disposed of the standing issue as

follows:

[T]he Supreme Court has explained that an

organization lacks standing to sue for money

damages on behalf of its members if “the

damage claims [of the members] are not

common to the entire membership, nor shared

by all in equal degree,” so that “both the fact

and extent of injury would require individu-

alized proof.” Warth, 422 U.S. at 515-16. The

district court concluded, and we agree, that

SCTA fails the third prong of the Hunt test

because recovery in this case would require

individualized proof by Sun City’s residents.

Id. at 61. The Second Circuit also affirmed dismissal of

SCTA’s RICO claims on the merits, holding that “‘[t]he

filed rate doctrine bars suits against regulated utilities

grounded on the allegation that the rates charged by the

utility are unreasonable.’” Jd. at 62 (quoting Wegoland

Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir. 1994)).

REASONS FOR DENYING THE WRIT

The Petition does not present any “special and

important reasons” justifying a grant of certiorari in this

case on either of the two independent grounds upon which

the District and Circuit Court dismissed SCTA’s com-

plaint. See Sup. Ct. R. 10.1 (“A petition for a writ of

certiorari will be granted only when there are special and

important reasons therefor.”).

Since this Court’s seminal decision in Hunt uv.

Washington State Apple Advertising Comm’n, 432 U.S. 333

(1977), each court to address the issue, including seven

circuit courts of appeal, has held that an association lacks

standing to seek monetary damages on behalf of its indi-

vidual members. Of course, without standing, SCTA has

no right to pursue its civil RICO claim, thus obviating the

need for this Court to consider the application of the filed

rate doctrine to such a claim.

xT

In any event, the lower court’s conclusion that the

filed rate doctrine bars SCTA’s RICO claim is supported

by clear and consistent authority. This Court has applied

the filed rate doctrine to bar ratepayer claims in numerous

contexts. See, e.g., Square D Co. v. Niagara Frontier

Tariff Bureau, Inc., 476 U.S. 409, 417, 423-24 (1986)

(antitrust); Arkansas La. Gas Co. v. Hall, 453 U.S. 571,

584-85 (1981) (breach of contract); Montana-Dakota Utils.

Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246, 251-52

(1951) (fraud). Moreover, each of the four circuit courts

to address the issue has held that the filed rate doctrine

likewise bars a ratepayer’s civil RICO claim based on a

utility’s alleged fraud in the ratemaking process. This

Court has denied certiorari from each such decision in

which the ratepayer sought certiorari.

In short, SCTA raises no “conflict with the decision

of another United States court of appeals.” Sup. Ct. R.

10.1(a). Nor can it point to an issue that “has not been,

but should be, settled by this Court,” and no issue that

the Second Circuit “decided ... in a way that conflicts

with applicable decisions of this Court.” Sup. Ct. R.

10.1(c). The Court should refuse to employ its

discretionary review power because this case “‘involves no

more than the application of well-settled principles to a

familiar situation, and has little significance except for the

[parties].’” Powell v. Nevada, 1145S. Ct. 1280, 1284 (1994)

(Thomas, J., dissenting) (citations omitted).

I. THE COURT OF APPEALS CORRECTLY HELD

THAT SCTA LACKED STANDING TO SUE FOR

RECOVERY OF MONETARY LOSSES

ALLEGEDLY SUSTAINED BY ITS MEMBERS.

SCTA urges (at 6-11) that it has standing to press

damage claims on behalf of Sun City residents. In Hunt,

however, this Court established three requirements that

an association must satisfy before it may sue to enforce

the rights of its members:

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[A]n association has standing to bring suit on

behalf of its members when: (a) its members

would otherwise have standing to sue in their

own right; (b) the interests it seeks to protect

are germane to the organization’s purpose;

and (c) neither the claim asserted nor the

relief requested requires the participation of

individual members in the lawsuit.

432 USS. at 343.

This Court’s decision in Warth v. Seldin, 422 US.

490 (1975), forecloses SCTA’s ability to satisfy the third

prong of the Hunt test. In Warth, a homebuilders associ-

ation sought to recover, on behalf of its members,

$750,000 based on its claim that discriminatory zoning

ordinances deprived its members of “‘substantial business

opportunities and profits.’” Jd. at 515. Holding that the

homebuilders association lacked standing to pursue its

members’ damage claims, the Court reasoned that “what-

ever injury may have been suffered is peculiar to the

individual member concerned, and both the fact and

extent of injury would require individualized proof.” Id.

at 515-16.

The same is true of SCTA’s claim here. As the

Second Circuit noted, “each resident’s injuries during [the

relevant] period would differ depending upon the amount

of utility services consumed and the uses to which those

services were put.” 45 F.3d at 61. Because SCTA’s

complaint seeks damages on behalf of Sun City residents

“in an amount equal to the [allegedly] improper utility

rates paid” [Compl., Prayer for Relief], Hunt and Warth

preclude standing because both the fact and extent of each

ratepayer’s alleged injury would require individualized

proof.

SCTA nevertheless suggests (at 7-8) that Warth is -

distinguishable because it “was [not] an action for money

damages.” SCTA ignores that the homebuilders associa-

tion in Warth sought to recover $750,000 in damages.

5-

SCTA’s suggestion (at 7) that “[a]ssociational repre-

sentation . . .makes eminent sense here” because it would

“dispense[{]” with all the “cumbersome requirements” of

a class action is likewise meritless. While SCTA may

prefer to ignore those safeguards, the class action

formalities exist to ensure that the interests of the

multiple parties sought to be bound by a judgment (z.e.,

both Sun City residents and Citizens) will be protected.

This can only be accomplished when a “rigorous analysis”

of the prerequisites of Fed. R. Civ. P. 23(a) demonstrates

those safeguards have been met. General Tel. Co. uv.

Falcon, 457 U.S. 147, 161 (1982).'

Nor is there any validity to SCTA’s suggestion (at

10) that “an effective use of judicial resources would

permit associational representation as to liability and

aggregate damages, and would then have a local court in

Arizona determine the distribution of those damages on an

application by the SCTA for such determination.” As the

Second Circuit observed, “there is no contractual or

statutory vehicle for the equitable payment of any

recovery to all affected Sun City ratepayers.” 45 F.3d at

62.

For example, if an action were allowed to proceed without

meeting the class action prerequisites, “the question could arise later

whether [plaintiff association] had adequately represented the interests

of its members so as to preclude them from bringing suit on their

own.” Telecommunications Research & Action Ctr. ex rel. Checknoff v.

Allnet Communication Servs., Inc., 806 F.2d 1093, 1098 (D.C. Cir. 1986)

(Bork, J., concurring). Thus, the prospect of endless litigation arises,

“all... from this unnecessary circumvention of established class action

procedures.” Id

6-

0. THE SECOND CIRCUIT’S HOLDING ON THE

STANDING ISSUE PRESENTS NO CONFLICT

AMONG THE CIRCUITS.

SCTA attempts (at 8-10) to fabricate a conflict

among the circuits on the issue of associational standing

by citing Middlewest Motor Freight Bureau v. United

States, 525 F.2d 681 (8th Cir. 1975), and National

Commodity & Barter Ass’n v. Archer, 31 F.3d 1521 (10th

Cir. 1994) (“NCBA”). SCTA’s effort is unpersuasive: In

the eighteen years since this Court decided Hunt, every

court to address the issue directly—including seven circuit

courts of appeal—has held that a request for damages

precludes associational standing.”

Middlewest was decided before this Court decided

Hunt, and, as the District Court noted, 847 F. Supp. at

286, it is “a dubious proposition” “that Middlewest is still

good law,” even in the Eighth Circuit. See Terre Du Lac

Ass’n uv. Terre Du Lac, Inc., 772 F.2d 467, 471 (8th Cir.

1985) (rejecting associational standing because “[a]

damages remedy . . . would clearly require individualized

proof necessitating the individual participation of the

Association members”) (citing Hunt), cert. denied, 475 U.S.

1082 (1986). In any event, Middlewest’s unique facts

distinguish it from this and all of the other standing cases

In addition to the Second Circuit in this case, the following

federal circuit courts also have denied associational standing to an

organization on the basis that a claim to recover damages allegedly

sustained by its members or constituents violates the third prong of the

Hunt test: New Beckley Mining Corp. v. International Union, 18 F.3d

1161, 1166 (4th Cir. 1994); Unitec! Union of Reofers v. Insurance Corp.

of Am., 919 F.2d 1398, 1400 (9th Cir. 1990); Neighborhood Action

Coalition v. City of Canton, 882 F.2d 1012, 1017 (6th Cir. 1989);

Telecommunications Research & Action Ctr. ex rel. Checknoff v. Alinet

Communication Servs., Inc., 806 F.2d 1093, 1095 (D.C. Cir. 1986)

(R. Ginsburg, J.); Terre Du Lac Ass’n v. Terre Du Lac, Inc., 772 F.2d

467, 471 (8th Cir. 1985), cert. denied, 475 U.S. 1082 (1986); Simer v.

Rios, 661 F.2d 655, 682 n.57 (7th Cir. 1981), cert. denied, 456 U.S. 917

(1982); United Steelworkers of Am. v. University of Alabama, 599 F.2d

56, 58-59 (5th Cir. 1979)

-7-

cited above (at note 2). In Middlewest, the defendants

challenged the association’s standing for the first time on

appeal from a final judgment, after the association had

been litigating without objection for ten years, and after

the statute of limitations had run. Thus, to deny asso-

ciational standing at that stage would have “disabled”

individual claims by the association’s members. 525 F.2d

at 683 n.4. As the District Court in this case held, “these

‘prudential considerations’ are [not] present here.” 847 F.

Supp. at 286.

NCBA—which is not an associational standing case

at all—creates no split of authority, either. NCBA holds

only that an organization may suffer injury to its own

First and Fourth Amendment rights if its members are

harassed and its records seized. See 31 F.3d at 1524

(“‘[t]he NCBA can sue only with respect to its own prop-

erty or rights allegedly infringed’”) (citation omitted).

The rule in the Tenth Circuit, as elsewhere, is that an

association lacks standing to pursue claims on behalf of its

members where the claim asserted or relief requested

requires participation of the association’s individual

members. See Kansas Health Care Ass’n v. Kansas Dep’t

of Social & Rehab. Servs., 958 F.2d 1018, 1021-23 (10th

Cir. 1992) (citing Hunt and Warth).°

SCTA’s reliance (at 9-10) on Standardbred Owners Ass’n v.

Roosevelt Raceway Assocs., L.P., 985 F.2d 102 (2d Cir. 1993), is also, as

the District Court found, “misplaced.” See 847 F. Supp. at 286. The

association in Standardbred asserted its civil RICO claim to redress

injuries if had suffered, not as the representative of its individual

members. In any event, the Second Circuit’s supposed misapplication

of its own precedent is no ground for granting a petition for certiorari.

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Il. THE COURT OF APPEALS CORRECTLY HELD

THAT THE FILED RATE DOCTRINE

ARTICULATED BY THIS COURT BARS SCTA’S

CLAIMS.

As this Court uniformly has held, the “filed rate

doctrine” precludes courts from awarding to ratepayers

damages measured by the difference between the rate set

by or filed with the proper regulatory agency and the rate

that might have been set absent some alleged wrongdoing.

See, e.g., Square D Co. v. Niagara Frontier Tariff Bureau,

Inc., 476 U.S. 409, 423-24 (1986); Arkansas La. Gas Co. v.

Hall, 453 U.S. 571, 584-85 (1981) (“Hall”); Montana-

Dakota Utils. Co. v. Northwestern Pub. Serv. Co., 341 U.S.

246, 251-52 (1951); Keogh v. Chicago & N.W. Ry., 260

U.S. 156 (1922). This Court consistently has reaffirmed

that a plaintiff “can claim no rate as a legal right that is

other than the filed rate.” Montana Dakota Utils., 341

U.S. at 251. Thus, the Court invariably has rejected

claims by ratepayers alleging that they have been injured

by paying the filed rate, even if the filed rate resulted

from unlawful conduct. As Justice Brandeis explained in

Keogh:

Injury implies violation of a legal right. The

legal rights of shipper as against carrier in

respect to a rate are measured by the pub-

lished tariff. Unless and until suspended or

set aside, this rate is made, for all purposes,

the legal rate, as between carrier and shipper.

260 U.S. at 163.

This Court has applied the filed rate doctrine

“*whenever tariffs have been filed’” because “[t]he rights

as defined by the tariff cannot be varied or enlarged by

either contract or tort of the [regulated company].”

Square D, 476 US. at 416-17 & n.19. Thus, the filed rate

doctrine has been applied to all ratepayer claims, however

denominated, that allege injury based on payment of the

filed rate. See, e.g., Maislin Indus. v. Primary Steel, Inc.,

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497 U.S. 116 (1990) (breach of contract); Square D, 476

US. at 424 (antitrust); Montana-Dakota Utils., 341 US.

at 251-52 (fraud). The filed rate doctrine has become an

“established guidepost” of the law, Square D, 476 U.S. at

423-24, notwithstanding that the doctrine “‘is undeniably

strict and it obviously may work hardship in some cases,’”

Maislin, 497 U.S. at 127 (citation omitted).

Two important considerations Justice Brandeis

identified in Keogh continue to underlie the filed rate

doctrine. First, allowing courts to redetermine the filed

rates of a public utility would substantially usurp agency

authority; and second, awarding damages to some cus-

tomers of a regulated industry based on allegedly improper

rates those customers paid would frustrate a fundamental

objective of agency regulation—rate uniformity. See Hall,

453 U.S. at 577-78.

The filed rate doctrine and both of its purp»ses are

directly implicated by SCTA’s claim. SCTA’s complaint

expressly requests damages “in an amount equal to the

improper utility rates paid.” That method of calculating

damages would require the Court to set aside the Arizona

Corporation Commission’s determinations regarding

proper utility rates. See Hall, 453 U.S. at 578-79 (“No

matter how the ruling of the Louisiana Supreme Court

may be characterized . . . it amounts to nothing less than

the award of a retroactive rate increase based on specu-

lation about what the Commission might have done had

it been faced with the facts of this case.”). Furthermore,

awarding SCTA damages based on the rates it alleges that

the Arizona Corporation Commission should have set

would provide SCTA’s constituents with what is effec-

tively a preferential rate, in conflict with a fundamental

premise of rate regulation—the principle of uniformity.

This is because SCTA does not even purport to represent

the interests of all utility customers in Sun City, Arizona.

See Compl., 11 (“plaintiff represents ... owners of

residential real estate in Sun City, Arizona”).

-10-

The Second Circuit correctly applied the filed rate

doctrine here, holding that “RICO claims premised upon

alleged fraud perpetrated by utilities upon a rate-setting

agency are barred by the filed rate doctrine.” 45 F.3d at

62 (citing Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 20-

22 (2d Cir. 1994)). As the Court explained, “‘only by

determining what would be a reasonable rate absent the

fraud could a court determine the extent of the damages.

And it is this judicial determination of a reasonable rate

that the filed rate doctrine forbids.” 45 F.3d at 62

(quoting Wegoland, 27 F.3d at 21).

IV. THE LOWER COURT'S APPLICATION OF THE

FILED RATE DOCTRINE TO RICO CLAIMS

PRESENTS NO CONFLICT AMONG THE

CIRCUITS AND IS CONSISTENT WITH THIS

COURT’S PRIOR RICO DECISIONS.

The Second Circuit’s holding—that the filed rate

doctrine bars RICO actions by ratepayers who allege that

they are entitled to damages measured by the difference

between the actual and “proper” rates because of fraud in

the ratemaking process—is consistent with the decision of

every circuit court to address the issue. See Wegoland, 27

F.3d at 18 (filed rate doctrine bars RICO claim where rate-

payer alleged that utility’s unregulated subsidiaries sold

products and services to its regulated subsidiaries “at

inflated prices,” which regulated subsidiaries used “to

justify inflated rates”); Taffet v. Southern Co., 967 F.2d

1483, 1485 (11th Cir.) (en banc) (filed rate doctrine bars

RICO claim premised on allegation that utilities “fraudu-

lently obtained rate increases” “by improperly accounting

for purchases of spare parts”), cert. denied, 113 S. Ct. 657

(1992); H.J. Inc. v. Northwestern Bell Tel. Co., 954 F.2d

485, 486 (8th Cir.) (filed rate doctrine bars RICO claim

based on allegation that “Northwestern Bell bribed

members of the Minnesota Public Utilities Commission for

the purpose of influencing the officials in setting

telephone rates in Minnesota”) (“H.J. II”), cert. denied,

112 S. Ct. 2306 (1992); Lifschultz Fast Freight, Inc. v.

=a,

Consolidated Freightways Corp., 805 F. Supp. 1277 (D.S.C.

1992), affd mem., 998 F.2d 1009 (4th Cir.), cert. denied,

1145S. Ct. 553 (1993); Cullum v. Arkla, Inc., 797 F. Supp.

725 (E.D. Ark. 1992), aff'd mem., 994 F.2d 842 (8th Cir.

1993).

SCTA asserts (at 16-17) here, as it did below, that

Wegoland and H.J. II are distinguishable because in both

cases the regulatory agencies had taken or were in the

process of taking action to redress the damages incurred

by the defrauded ratepayers. Neither decision suggests,

however, that application of the filed rate doctrine

depends on a court’s assessment of the “adequacy” of the

administrative remedy. To the contrary, courts routinely

have dismissed damages suits that challenge the fairness

of the filed rates, despite the absence of comparable

administrative remedies. See, e.g., Hall, 453 U.S. at 578

(applying filed rate doctrine even though the regulatory

commission lacked authority to grant retroactive rate

relief); Montana-Dakota Utils., 341 U.S. at 254 (similar);

Taffet, 967 F.2d at 1492 (applying filed rate doctrine even

though court explic. ‘vy recognized that utility commissions

lacked refund power).

SCTA nevertheless asserts (at 11-12) that

application of the filed rate doctrine to RICO claims “is

impossible to square” with “the intent of Congress in

enacting RICO” and “the liberal and broad scope given

that statute’s remedial civil purposes by this Court.”

SCTA’s argument regarding congressional intent, how-

ever, ignores that the only RICO provision that confers a

private right of action, 18 U.S.C. § 1964(c), uses exactly

the same language as § 4 of the Clayton Act, 15 U.S.C.

§ 15—the successor to the antitrust provision construed by

Justice Brandeis in Keogh. Both the RICO and antitrust

statutes require that a private plaintiff be “injured in his

business or property by reason of” a statutory violation.

Thus, SCTA’s contention here is no different from that of

the government in Square D, which contended that the

legislative purpose of “promoting competition” provided a

le

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policy basis for displacement of the filed rate doctrine.

This Court rejected that assertion, opining that such a

“general legislative purpose” was insufficient to override

the longstanding Keogh doctrine. Square D, 476 US. at

419-21.

The logic of Square D applies fully to RICO cases.

When Congress enacted RICO in 1970, it “modeled

§ 1964(c) on the civil-action provision of the federal

antitrust laws” construed in Keogh. Holmes v. Securities

Investor Protection Corp., 1128. Ct. 1311, 1317 (1992). As

this Court observed in interpreting the meaning of

§ 1964(c),

[w]e may fairly credit the 91st Congress, which

enacted RICO, with knowing the interpreta-

tion federal courts had given the words earlier

Congresses had used first in $7 of the

Sherman Act, and later in the Clayton Act’s

§ 4. It used the same words, and we can only

assume it intended them to have the same

meaning that courts had already given them.

Id. at 1317-18. Thus, Congress must have “intended that

this language . . . would be interpreted just as § 4 of the

Clayton Act had been.” Taffet, 967 F.2d at 1494 n.12,

1495 (filed rate doctrine bars RICO claims because “even

if the filed rate is obtained through fraud, it remains true

that one does not suffer the predicate ‘injury to business

or property’ by paying the filed rate”).*

* SCTA’s observation (at 14) that “anti-trust decisions . . . do not

provide a general framework for applying RICO” does not advance its

statutory construction argument. While the Court has declined to

import into civil RICO antitrust doctrines related to the antitrust

violation itself (such as the antitrust injury requirement) or principles

unrelated to statutory construction (such as the exclusivity of federal

jurisdiction), civil RICO does incorporate antitrust doctrines that

inhere in the words “injured in his business or property.” See Holmes,

112 S. Ct. at 1317-18. One such doctrine is the filed rate doctrine,

which Keogh, 260 U.S. at 163, expressly grounded upon the “injury”

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SCTA’s reliance upon this Court’s decisions in H.d.

Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (1989)

(“H.J. I”), and Sedima, S.P.R.L. v. Imrex Co., 473 U.S.

479 (1985), is also unwarranted. The only issue this

Court addressed in H.J. I is the conduct required to

“meet[ ] RICO’s pattern requirement.” 492 U.S. at 232.

The Court noted that the District Court had relied upon

the filed rate doctrine as an independent ground for

dismissal of the complaint, but stated that “(t]he Court of

Appeals did not consider this issue, and we have no

occasion to address it here.” 492 US. at 234 nl.

Significantly, following remand from this Court, the

District Court dismissed the complaint on filed rate

doctrine grounds, the Eighth Circuit affirmed, and this

Court denied plaintiff's second petition for a writ of

certiorari. 734 F. Supp. 879 (D. Minn. 1990), aff'd, 954

F.2d 485 (8th Cir.), cert. denied, 112 S. Ct. 2306 (1992).

Sedima is relevant only insofar as it confirms that

a civil RICO plaintiff “can only recover to the extent that

... he has been injured in his business or property.” 473

US. at 496. The filed rate doctrine precludes SCTA from

making such a showing here. Equally unhelpful to SCTA

is the statute’s “liberal construction clause,” which, as the

Court recently noted, “‘only serves as an aid for resolving

an ambiguity; it is not to be used to beget one.’” Reves v.

Ernst & Young, 113 S. Ct. 1163, 1172 (1993) (quoting

Sedima, 473 U.S. at 492 n.10).°

requirement of § 7 of the Sherman Act (a requirement Congress later

engrafted onto §4 of the Clayton Act). See Associated Gen.

Contractors, Inc. v. California State Council of Carpenters, 459 U.S. 519,

530, 534 (1983) (discussing legislative history of antitrust statutes’ civil-

action provision).

5

SCTA makes two other arguments that are undeserving of this

Court’s attention. First, SCTA says (at 12, 14 n.6, 17) that the Second

Circuit’s earlier decision in County of Suffolk v. Long Island Lighting

Co., 907 F.2d 1295 (2d Cir. 1990) (“LILCO”), is inconsistent with its

application of the filed rate doctrine to SCTA’s civil RICO claim. The

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CONCLUSION

The Second Circuit’s unanimous decision is based on

its application of two settled (and independent) legal

principles to SCTA’s complaint. This case presents no

novel question, creates no conflict among the circuits and

follows from the applicable decisions of this Court.

Accordingly, the petition for a writ of certiorari to the

United States Court of Appeals for the Second Circuit

should be denied.

Respectfully submitted,

JAMES F. STAPLETON JOSEPH E. MAIS

Day, BERRY & HOWARD Counsel of Record

One Canterbury Green LEX J. SMITH

Stamford, Connecticut 06901 ANTHONY L. MARKS

(203) 977-7300 BROWN & BAIN, P.A.

2901 North Central Avenue

Post Office Box 400

Phoenix, Arizona 85001

(602) 351-8000

March 16, 1995.

Second Circuit in Wegoland expressly rejected an identical argument,

27 F.2d at 22 (“LILCO erects no barrier in this Circuit to the

application of the filed rate doctrine to RICO suits brought by

ratepayers against utilities.”). SCTA’s assertion that the Second

Circuit misconstrued its own decision in LILCO (in which it did not

even address the filed rate doctrine) presents no issue justifying

discretionary review by this Court.

Second, SCTA asserts, on one hand (at 13), that “Wegoland will

eviscerate RICO,” and on the other (at 15), that Wegoland is dis-

tinguishable from this case. The answer to the first of these

inconsistent contentions is that SCTA has no right to seek this Court’s

review of Wegoland, which is an unrelated case. And the claim that

the Second Circuit misapplied its own precedent (because Wegoland is

distinguishable)—an argument SCTA presented unsuccessfully

below—likewise fails to justify discretionary review by this Court.