Schmidt, Sethi & Akmajian Blog

Torts: Federal Hold Tariffs Limit Economic Damages Against Public Utility & Its Contractors

Posted by Ted A. Schmidt | Oct 19, 2015 | 0 Comments

US Airways, Inc. v. Qwest Corp., 722 Ariz. Adv. Rep. 12 (App. Div. I, October 1, 2015) (J. Portley)


Plaintiff claimed nearly two million dollars in damages related to business interruption when it lost internet cable service due to alleged negligence in the staking and eventual cutting of the line during a new carport installation. It was claimed that Qwest's map was wrong in designating where the line was and the blue staker was negligent in failing to confirm it was wrong.  The trial court granted Qwest's motion seeking a limitation of damages of $586.40 which is all that would be allowed under the federal tariff limiting the utility's liability to third parties for cable interruption. The Arizona Court of Appeals affirmed.

Federal courts have repeatedly held that tariffs have the effect of law. Public policy supports the application of damage limitations  in tariffs as they allow the public utility to better provide services to the masses at a reasonable price. The plain language of these tariffs demonstrates the intent they apply to all claims including those of third parties like plaintiff here. “The tariff provision applies to any claim, whether by customers ‘or by any others,'  as long as the claim is for damages 'associated with the installation, provision, preemption, termination, maintenance, repair or restoration of service.' Id. By including ‘any others,' the tariff provision includes US Airways.”

The Restatement creates no liability on the bluestaker for alleged negligence in staking the ground vis a vis a third party to the blue staking contract where that third party sustained only economic damages.

                                                                                                                                                                                                    This holding is not violative of Arizona's Constitutional anti-abrogation clause (Arizona Constitution, Article 18, Section 6) as there was no negligence claim recognized in common law against a public utility beyond the cost of service at the time the Arizona Constitution was adopted.

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".


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