LIACOS, J.
The Attorney General brought complaints against Lowell Gas Company and Cape Cod Gas Company (companies), pursuant to G.L.c. 93A, § 4, G.L.c. 12, § 10, G.L.c. 164, § 78, and G.L.c. 231A. The amended complaints allege that the companies, by allocating short-term debt interest expense to the inventory cost of gas charged to consumers, have committed unfair and deceptive practices under G.L.c. 93A, (count 1) and common law fraud (count 2). The Attorney General seeks injunctive relief, restitution, and damages for the alleged illegal acts of the companies.
Originally, in September, 1977, the Attorney General brought separate actions in the Superior Court against each of the companies under G.L.c. 93A, § 4. The companies filed a motion to dismiss in each action. Shortly thereafter they filed a petition under G.L.c. 211, § 4A, in the county court to transfer both actions to this court for hearing and determination of the motions to dismiss. In January, 1978, the single justice ordered that the actions be transferred to the county court and consolidated.
The allegations of the complaints, as well as those inferences favorable to the plaintiff which may be drawn therefrom, are to be taken as true for the purpose of ruling on a motion to dismiss. Nader v. Citron, 372 Mass. 96, 98 (1977). A summary of the facts as alleged in the Attorney General's complaints is as follows. Lowell Gas Company (Lowell) and Cape Cod Gas Company (Cape Cod) are privately owned gas utility companies, subject to the jurisdiction of the Department of Public Utilities of the Commonwealth (department).
In spite of these required procedures, the companies allocated interest on short-term debt to the cost of fuel sold to consumers, without submitting the question of the propriety of this practice to the department. On August 1, 1977, the department made clear that it had neither permitted nor ever approved the companies' inclusion of short-term interest in the cost of fuel, and that such practice
The Attorney General also alleges in count 2 that the companies' practice of adding interest expense to the cost of gas charged to consumers was done knowingly or without ascertaining easily verifiable facts; that the companies fully intended to deceive both their customers and the department as to the correct cost of gas; that the department and the customers relied on the companies' misrepresentations as to cost of gas; and that the customers of the companies were damaged as a result of that reliance.
The companies' motion to dismiss asserts lack of subject matter jurisdiction, lack of standing, and failure to state a claim on which relief can be granted, as grounds for dismissal of the actions. We address these contentions seriatim.
Lack of subject matter jurisdiction. The companies characterize the suit as an impermissible collateral attack on rates lawfully promulgated by the Department of Public Utilities. They claim that, since rates and related accounting and reporting practices of gas companies are subject to regulation by the department under G.L.c. 164, that statutory scheme is exclusive and precludes the courts from taking jurisdiction over such a complaint.
While it is undisputed that suits directly challenging public utility rates as determined by the department may not be brought in the Superior Court, Boston v. Edison Elec. Illuminating Co., 242 Mass. 305 (1922),
Proceeding from this perspective, we note that nothing in G.L.c. 164, either explicitly or implicitly, excludes application of c. 93A to unfair or deceptive acts or practices of gas utility companies. Indeed, the language of c. 164, § 78,
The companies claim also that the courts lack jurisdiction as to the common law count alleging fraud. It is true that the cases relied on by them, such as Sullivan v. Boston Consol. Gas Co., 327 Mass. 163 (1951), Boston Consol. Gas Co. v. Department of Pub. Utils., 321 Mass. 259 (1947), Boston v. Edison Elec. Illuminating Co., supra, and others make it clear that the reasonableness of rates set by the department or the validity of collections made under them cannot be challenged directly in the courts by private parties or consumers. See Haverhill Gas Co. v. Findlen, 357 Mass. 417 (1970). We agree with the companies' claim that rate determinations by the department are subject to judicial review only under the provisions of G.L.c. 25, § 5. However, both the cases cited and the statute are inapposite for the reason that, as we have stated, these complaints are not an attack on the reasonableness or validity of rates fixed by the department. Count 2 alleges fraud by the companies committed on the department. None of the cases cited by the companies involves claims of fraud. Further, none of those cases involves actions brought by the Attorney General.
We need not venture an opinion as to whether the enactment of G.L.c. 164, placing companies such as these within the regulatory purview of the department, precludes any common law action by any party against such companies, as the companies claim. The power of private parties to institute legal proceedings is not necessarily coextensive with that of the Attorney General. Thus, even if it be assumed that the companies are correct that the enactment of G.L.c. 164 so modified the common law
The companies also argue that the case must be dismissed on account of the Attorney General's failure to exhaust the appropriate administrative remedies.
The trial judge, in his discretion, may decide that further administrative proceedings before the Department of Public Utilities are appropriate for determination of the facts relating to both liability and the extent of damages.
Lack of standing. The companies next contend that the Attorney General lacks standing to bring both the c. 93A and the common law fraud claims. They assert, first, that the language of § 4 of c. 93A
Our view of § 4 is not, however, congruent with that of the companies in any event. The cases interpreting the Federal Trade Commission Act, whose guidance we are directed to seek,
We further think that, when considered in the context of c. 93A, § 6,
The companies also argue that the Attorney General lacks standing to assert the common law fraud count alleged in the complaints, because G.L.c. 164, § 78, does not provide a statutory grant of standing, and because he did not allege damage to the Commonwealth or one of its agencies as a result of the claimed misrepresentations. Both these contentions miss the mark. Chapter 164, § 78, is not an explicit grant of standing, and the Attorney General does not, and need not, rely on it alone. Rather, as we have noted, G.L.c. 12, § 10, in combination with G.L.c. 164, § 78, lays the foundation for his standing. Further, the Attorney General has properly pleaded the fraud count so as to avoid standing problems. He need not allege that the Commonwealth per se, or any agency thereof, has suffered damage on account of the companies' misrepresentations. Rather, his allegations that the companies deceived, and thereby harmed, consumers were appropriately brought, pursuant to the powers conferred by G.L.c. 12, § 10,
The companies argue that the collection by a gas company of rates approved by the department is lawful and not subject to challenge in a civil action. We do not dispute this general assertion. We have previously held in other contexts that it is not wrongful for a gas company to charge its customers the rates established by an order of the department, and that rates charged by a public service company in accordance with filed schedules allowed by the department cannot be questioned in court proceedings between the customers and the company. Cf. Sullivan v. Boston Consol. Gas Co., 327 Mass. 163 (1951) (customers precluded from maintaining suit to obtain refund of fuel charge collected in accordance with formula promulgated by department despite allegations that formula contained certain provisions included by mistake). Boston v. Edison Elec. Illuminating Co., 242 Mass. 305 (1922) (customer not permitted to maintain suit alleging that electric rates were unreasonable where rates had been approved by department). The case before us, however, markedly differs from these. The Attorney General's complaints do not allege mistake or unreasonableness in the department's promulgation of rates. Rather, they allege deceptive conduct by the companies intended to subvert the very rate structure whose protection they seek. Fraudulent misrepresentations as to cost of gas cannot become immune from suit by virtue of department promulgation of rates in reliance thereon. To hold otherwise would only serve to encourage deceptive practices of
The companies next assert that (1) the complaints fail to allege any unfair methods of competition or unfair or deceptive acts or practices within the meaning of G.L.c. 93A, § 2,
Chapter 93A, § 2, prohibits "unfair or deceptive acts or practices in the conduct of any trade or commerce." The Attorney General may investigate business practices he believes may be unfair or deceptive, and may bring an action in the name of the Commonwealth against any person he believes is using such practices. Dodd v. Commercial Union Ins. Co., 372 Mass. at 75-76. Chapter 93A
Through c. 93A the Legislature has attempted to regulate business activities toward the end of providing proper disclosure of information and a more equitable balance in the relationship of consumers to persons conducting business activities. DeCotis, supra at 238. The Attorney General's complaints are aimed precisely at furthering these ends. The companies assert, since they were required by G.L.c. 164, § 94,
The companies' claim of exemption under G.L.c. 93A, § 3(1)(a), is similarly misguided. Section 3 (1) (a) exempts "transactions or actions otherwise permitted under laws as administered by any regulatory board or officer acting under statutory authority of the commonwealth or of the United States." Section 3(2) places the burden of proving the applicability of the exemption on the companies.
Further, the companies assert that the counts for common law fraud fail to state a claim since (1) the Attorney General did not allege injury to himself, to the Commonwealth, or to an agency thereof, as a result of reliance on the misrepresentations alleged, and (2) the alleged misrepresentations concern matters of opinion or law, and not matters of fact. The first of these arguments has already been addressed earlier in this opinion, in our discussion of the question of standing.
We also find the second argument to be without merit. "In this Commonwealth it has been held in a long line of cases that `the charge of fraudulent intent, in an action for deceit, may be maintained by proof of a statement made, as of the party's own knowledge, which is false, provided the thing stated is not merely a matter of opinion, estimate, or judgment, but is susceptible of actual knowledge; and in such case it is not necessary to make any further proof of an actual intent to deceive.' Chatham Furnace Co. v. Moffatt, 147 Mass. 403, 404 [1888]." Snyder v. Sperry & Hutchinson Co., 368 Mass. 433, 444 (1975), quoting from Powell v. Rasmussen, 355 Mass. 117, 118 (1969). The true cost of gas used in setting rates by the department is not a matter of opinion. The factors to be included in that cost are set forth in Account 151 of the
The motion to dismiss both the c. 93A and the common law fraud claims is denied. The case is remanded to the single justice for hearing or for transfer to the Superior Court.
So ordered.
QUIRICO, J. (dissenting).
For the reasons which follow, I dissent from the denial of the motions to dismiss the actions brought by the Attorney General against the two public utility companies, Lowell Gas Company (Lowell Gas) and Cape Cod Gas Company (Cape Cod Gas) for recovery of damages for alleged common law fraud and for violation of G.L.c. 93A.
On January 19, 1977, each of the two companies filed with the Department of Public Utilities (department) proposed rate schedules which would increase charges to its customers. The department held a series of hearings thereon and then rendered a separate decision as to each company on August 1, 1977. The Attorney General, acting for himself and for the Massachusetts Consumers'
On August 12, 1977, the Attorney General, acting under G.L.c. 25, § 5, appealed from both decisions of the department, and the appeals are still pending before this court for Suffolk County. Each appeal states that the Attorney General is a party in interest and is aggrieved by the department's decision, and it alleges a number of errors in the decision including the following: "The Department's failure to make a finding that the ... Gas Company has overcharged its customers $ ... through the company's Purchased Gas Adjustment Clause is based upon errors of law, is unwarranted by the facts on the record, is unsupported by substantial evidence, is arbitrary and capricious, and is an abuse of discretion." As to Lowell Gas the appeal states that the overcharge was $1,175,545, and as to Cape Cod Gas that it was $503,576.
The actions which are the subject of the motions to dismiss being decided by the court today were commenced
1. The Legislature has enacted a comprehensive statutory scheme for the regulation of public utilities. As a part of that scheme it has delegated to the department the responsibility for initially finding facts, making rulings, and rendering decisions in all proceedings concerning the rates which such companies may charge their customers. G.L.c. 164. As another part of that scheme it has delegated to the Supreme Judicial Court the responsibility for judicial review on "appeal as to matters of law from any final decision, order or ruling of the commission [of the department]." G.L.c. 25, § 5, as appearing in St. 1953, c. 575, § 1. G.L.c. 30A, § 14. New England Tel. & Tel. Co. v. Department of Pub. Utils., 372 Mass. 678, 682, 685 (1977). Fitchburg Gas & Elec. Light Co. v. Department of Pub. Utils., 371 Mass. 881, 884-885 (1977). Newton v. Department of Pub. Utils., 367 Mass. 667, 673-674 (1975). Cambridge Elec. Light Co. v. Department of Pub. Utils., 363 Mass. 474, 502-504 (1973).
It is my opinion that under our statutory scheme the route to relief for customers of a public utility company under facts such as those alleged by the Attorney General in the actions at law must start with administrative proceedings before the department, and that parties aggrieved by the results at that level may then obtain judicial review on questions of law. Indeed the Attorney General started out by intervening in the department's proceedings and seeking relief at that level, and followed
I would apply the doctrine requiring the exhaustion of statutorily prescribed administrative remedies before allowing resort to the courts in this situation. The doctrine has been applied to controversies in which the department had power to act but the parties sought relief from the courts instead. Holyoke Water Power Co. v. Holyoke, 349 Mass. 442 (1965). It has also been applied where the Commissioner of Insurance had power to act with reference to insurance premiums but the parties resorted to the courts instead. Gordon v. Hardware Mut. Cas. Co., 361 Mass. 582 (1972). I would enforce the doctrine strictly in this case and in all other cases to which it is applicable. Only by doing so can our courts avoid being inundated by litigation involving controversies reserved for initial fact finding in administrative proceedings. East Chop Tennis Club v. Massachusetts Comm'n Against Discrimination, 364 Mass. 444 (1973).
The court in this case, in concluding that a Superior Court action is appropriate and that exhaustion of remedies from the department is unnecessary, relies in large part on our prior decisions holding that the department cannot order reimbursement of charges previously paid by customers under approved rates. Fryer v. Department of Pub. Utils., 374 Mass. 685, 690 (1978). Newton v. Department of Pub. Utils., 367 Mass. 667 (1975). While our prior decisions contain language which appears to leave the department totally without power to order such reimbursements, I would note that the question has never arisen under precisely the kind of allegations made here of fraud by the companies. In any event, I believe it is appropriate to consider the exact boundaries of the department's
Resolution of the allegations of fraud and deception made by the Attorney General in the actions at law, and the computation of damages, if any, will of necessity involve technical questions of utility accounting practices and rate calculation procedures. The Attorney General has already presented these questions to the forum best equipped to handle them, that is, the department. Further relief may be forthcoming from the department as a consequence of the pending appeals of the Attorney General. I would foreclose the proliferation of parallel actions at law on these issues until all available administrative remedies and the judicial review thereof are exhausted. I would thus conserve our overtaxed judicial capability for the adjudication of legal questions after completion of the administrative process. East Chop Tennis Club v. Massachusetts Comm'n Against Discrimination, supra.
2. In my opinion, the comprehensive statutory scheme for the regulation of public utility rates applies equally to bar recovery by the Attorney General from the companies on the count under G.L.c. 93A, as it does on the count for common law fraud. It is true that we held in
FootNotes
Account 431 of the Uniform System provides for the recording of interest on short-term debt as follows: "431. Other Interest Expense. This account shall include all interest charges not provided for elsewhere. Items 1. Interest on notes payable on demand or maturing one year or less from date and on open accounts, except notes and accounts with associated companies. 2. Interest on customer deposits. 3. Interest on claims and judgments, tax assessments, and assessments for public improvements past due. 4. Income and other taxes levied upon bondholders of the utility and assumed by it."
Account 151 describes the costs to be included in cost of fuel in inventory, which is subsequently sold to customers, as follows: "151. Fuel. This Account shall include cost of fuel on hand. 1. Invoice price less any cash or other discounts. 2. Freight, switching, demurrage and other transportation charges, not including, however, any charges for unloading from the shipping medium. 3. Excise taxes, purchasing agents' commissions, insurance and other expenses directly assignable to cost of fuel."
In Lowell, supra, and Cape Cod, supra, the department stated: "Because interest has been charged to inventory for five years, the Commonwealth Intervenors have requested in their brief that the matter be referred to the Attorney General for remedial action. As a party to the case, the Attorney General is acquainted with the facts and he may initiate whatever action, if any, he deems appropriate."
After gas is extracted from the earth it assumes the character of a commodity and becomes subject to sale and exchange in the same manner as any other article of commerce. 38 Am.Jur.2d Gas and Oil § 149 (1968). It should be noted that count 2 of the amended complaints alleges, inter alia, a violation of the Uniform System of Accounts for Gas Companies issued by the department pursuant to its authority under G.L.c. 164, § 81.
Another distinction is found in the contrast between what this court has construed as the broad sweep of c. 93A, see Dodd v. Commercial Union Ins. Co., 372 Mass. 72, 76-77 (1977) and the more limited scope of the New Jersey Consumer Fraud Act, aimed, as it is, "basically at unlawful sales and advertising practices designed to induce consumers to purchase merchandise or real estate." Daaleman, supra at 270.
Finally, the New Jersey court appears to have based its decision, in part, on its concern as to the plaintiffs' claim for treble damages, the punitive effect of which, if allowed, would be counterproductive because "it is the public users of the utility service on whom the punitive award will fall." Id. at 272. No parallel cause for concern appears in this action. The Attorney General seeks injunctive relief with respect to the allegedly deceptive practices, and only such damages as are necessary "to restore to any person [moneys or property] who has suffered any ascertainable loss" by reason of those practices. See c. 93A, § 4, as amended through St. 1972, c. 544.
The case law is clear that the department does not have authority to order reimbursement of overcharges to consumers; in apparent recognition of this rule, the Attorney General does not seek such reimbursement in his appeals filed pursuant to G.L.c. 25, § 5. Rather, he seeks only formal notice from the department of the companies' violations of the Uniform System of Accounting for Gas and Electric Companies, and findings of fact by the department as to the dollar amount of the alleged overcharges. These appeals do not foreclose the instant suit.
The issue in Schubach was whether the filing of collection actions in locations inconvenient to the defendants' debtors, for the purpose of precipitating default judgments, could be an unfair practice under G.L.c. 93A, even though the practice was permitted under the venue provisions of G.L.c. 223, § 2. We held there that such conduct was actionable as an unfair practice under G.L.c. 93A, § 2. The companies claim that Schubach is not controlling since the practice in issue there was merely permitted by statute, while in this case the companies were required to charge according to rates as approved by the department. We reject this analysis. If anything, this case presents an even more appropriate occasion for the application of § 2, since the fraudulent accounting practices alleged in the complaints were neither required nor permitted.
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