Atkin Wright & Miles v. Mountain States Telephone & Telegraph Co.
1985 Utah LEXIS 968, 709 P.2d 330, 1985 WL 1083575 (1985)
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Rule of Law:
Public utility tariffs limiting liability for directory errors are binding and have the force of law, precluding ordinary negligence claims for such errors unless gross negligence or willful misconduct is shown. However, such tariffs may not apply to other negligent services like intercept operations, for which damages can be recovered if actual lost net income and causation are proven with reasonable certainty, not mere speculation.
Facts:
- In October 1980, Mountain States Telephone & Telegraph Co. (Mountain Bell) distributed its St. George yellow-page directory.
- The directory correctly listed the law firm of Atkin, Wright and Miles' (Atkin) telephone number as 673-4605 in both the white and yellow pages.
- Mountain Bell erroneously listed the same number (673-4605) in the yellow pages for Michael D. Hughes, an attorney in the law firm of Allen, Thompson and Hughes (Allen).
- As a result, anyone who dialed the number listed for Mr. Hughes in the yellow pages reached the Atkin firm.
- To address the error, Mountain Bell initially changed Atkin’s phone number and placed an automatic intercept recording on Atkin’s original number, which directed callers to new numbers for both firms.
- This initial intercept was in effect for approximately 36 hours.
- In February 1981, Mountain Bell placed a second, 'live' intercept on Atkin’s phone number and related numbers (673-4605, -4606, -4607, and -4608) to direct callers to the correct numbers for both the Atkin and Allen firms, in compliance with an order from the Public Service Commission.
- Atkin presented evidence that this second intercept did not always function properly, and that the firm's gross income declined for a three-month period, during only a small part of which the intercept was in place. Atkin also conceded that members of the firm were devoting substantial periods of time to their litigation against Mountain Bell.
- One Atkin attorney testified he lost a client due to the malfunctioning intercept, but no evidence was provided regarding the value of the lost fees.
Procedural Posture:
- Atkin, Wright and Miles (Atkin) filed a complaint in district court for damages and an injunction against Mountain States Telephone & Telegraph Co. (Mountain Bell).
- The trial court issued a temporary restraining order and preliminary injunction requiring Mountain Bell to reassign Atkin its original phone number and refrain from changing it.
- Mountain Bell filed a petition for extraordinary relief or, in the alternative, a petition for an interlocutory appeal in the Utah Supreme Court from the preliminary injunction, which the Supreme Court denied.
- The Allen, Thompson and Hughes firm then filed a petition with the Public Service Commission (PSC) to obtain relief.
- The PSC ordered Mountain Bell to place a live intercept on Atkin’s phone number (and others) to direct callers to the correct numbers for both the Atkin and Allen firms.
- To comply with the PSC order, Mountain Bell filed a motion in the district court to dissolve the preliminary injunction; the district court refused.
- Mountain Bell filed an interlocutory appeal of the district court's refusal to dissolve the injunction in the Utah Supreme Court, which subsequently vacated the district court's order in Mountain States I.
- The district court then proceeded to a trial of Atkin’s claim for damages against Mountain Bell.
- The jury found for Atkin and awarded $25,000 in general damages and $30,000 in punitive damages.
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Issue:
Does a public utility's tariff limiting liability for directory errors apply to claims of negligence in directory listings or to negligence in the operation of a subsequent intercept service, and what is the standard for proving damages for lost income in such cases?
Opinions:
Majority - Stewart, Justice
No. Mountain Bell's tariff limiting liability for directory errors applies to the yellow page listing error, precluding an ordinary negligence claim for that error, but does not apply to the negligent operation of the intercept. However, Atkin failed to provide sufficient, non-speculative proof of damages for either the negligence or intentional interference claims, nor for punitive damages. The court reasoned that the Public Service Commission (PSC) has exclusive jurisdiction over matters delegated to it by statute, and Mountain Bell's tariffs have the binding force of law. Citing Mountain States I, the court reaffirmed that customers have no property right in a specific phone number, and Mountain Bell may change numbers in furtherance of adequate telephone service. Therefore, because the number change and initial intercept were made pursuant to a PSC order, or in furtherance of adequate service, there was no legal basis for a breach of contract claim for these actions. Regarding the negligence claim for the yellow page listing error, the court held that Mountain Bell’s General Exchange Tariff § 20(E)(3), which limits liability for directory errors to a refund of charges for the affected service, is binding. This limitation is permissible due to the high chance of inadvertent error and the possibility of large consequential damages. Such limitations are enforced unless the company's conduct is grossly negligent, willful, or wanton. Atkin failed to present evidence of gross negligence or willful misconduct, as a single publication error without further evidence is insufficient. However, the court noted that the tariffs do not purport to limit Mountain Bell’s liability with respect to the operation of an intercept. Thus, Atkin could theoretically recover damages for negligent operation of the intercept if adequately proven. But Atkin failed to meet the required standard of proof for damages. The plaintiff must prove both the fact of damages (a reasonable probability, not mere speculation) and the amount of damages (a reasonable, though not necessarily precise, estimate). Proof of loss of gross income is an insufficient foundation for damages; lost net income must be shown. Atkin’s evidence of a three-month decline in gross revenues, during which the intercept was only partially in effect, was speculative and did not establish causation, especially given the natural fluctuations in law firm income and other factors like attorneys dedicating time to litigation. Individual client testimonies were too vague to attribute specific losses. Furthermore, the claim for intentional interference with prospective economic relations failed because Atkin provided no evidence that Mountain Bell acted with improper intent or by improper means. The intercept was implemented to solve a problem caused by an inadvertent mistake. Finally, the award of punitive damages was vacated because Atkin failed to prove compensatory damages, and there was no evidence of willful and malicious conduct or knowing and reckless indifference required for punitive damages.
Analysis:
This case significantly reinforces the power of public utility tariffs to limit liability for common service errors like directory listings, highlighting that such limitations are legally binding unless extreme misconduct (gross negligence or willful/wanton behavior) is proven. It also clarifies that these tariff limitations might not extend to all services, such as new technological implementations like call intercepts, opening a potential avenue for ordinary negligence claims in those areas. Crucially, the ruling establishes a stringent standard for proving economic damages, requiring concrete evidence of lost net income and a clear causal link to the defendant's actions, moving beyond speculative connections to gross revenue declines. This creates a high evidentiary bar for plaintiffs seeking recovery for business losses against utilities, safeguarding utilities from potentially massive liability for routine operational mishaps while maintaining accountability for demonstrably negligent service where specific losses are quantifiable.
