If a public utility violates a state law or rule, only those who were directly injured by the violation, as determined by the order of the Public Utilities Commission of Ohio (PUCO), can file a lawsuit for damages, the Ohio Supreme Court ruled today.

In a unanimous decision, the Supreme Court dismissed a 15-year-old class-action lawsuit against Ameritech Mobile that stems from the sale of cellular services in the early 1990s. The Court clarified who is eligible under R.C. 4905.61 to sue for triple the amount of damages suffered when a utility is found by the PUCO to have violated the law. The leaders of the class-action lawsuit argued the law allows anyone injured by a violation to seek damages.

Writing for the Court, Justice Sharon L. Kennedy stated that, pursuant to the language of R.C. 4905.61, the persons or entities that have standing to sue for “treble damages” is determined by examining the language of the PUCO order or finding. In this case, the PUCO found resellers of cell phone service in the wholesale market were injured by the violation, not retail customers. Because the class-action lawsuit members were retail customers, they were ineligible to sue, the Court concluded.

Cell Service Sales Dispute Launches Litigation
In 1993, Westside Cellular Inc., known as Cellnet, filed a complaint with the PUCO against SMSA Limited Partnership, doing business in Ohio as Ameritech Mobile, and other wholesale cellular service providers. Cellnet purchased cell service wholesale from Ameritech and marketed the service. Ameritech Mobile was required to offer it services on a wholesale basis at the same price Ameritech charged its own affiliated Ameritech retail operations, Cellnet claimed.

In 2001, the PUCO ruled that Ameritech violated a number of practices, including R.C. 4905.33, by charging Cellnet a higher rate than Ameritech’s retail affiliate paid for the same services. Ameritech appealed the ruling, and the Supreme Court affirmed the commission’s decision in 2002.

Other Customers Pursue Ameritech
Based on the PUCO’s ruling, Intermessage Communications, Cindy Satterfield, and her company, Highland Speech Services, filed a class-action lawsuit in Cuyahoga County against Ameritech and other providers in 2003. As the litigation proceeded, Satterfield and her company ended their involvement in the case and Ameritech remained the only service provider being pursued by the class.

Intermessage was a retail purchaser of cell phone service and used Ameritech service for the backup alarm systems in security equipment it sold its customers. Intermessage paid Ameritech for cell service then passed the cost onto its own customers.

Intermessage attempted to define the class as all Ameritech subscribers from 1993 to 1998, and sought to recover damages from Ameritech through a number of theories. Intermessage argued that the PUCO found Ameritech’s violations led to subscribers paying more for cell service than they would otherwise have been charged in service territories across Ohio.

Ameritech challenged the proposed class, and the trial court made several rulings in 2006 and 2008 that limited the type of customers who could be in the class. The class was narrowed to purchasers of Ameritech service within geographic areas of Ohio where the PUCO found Ameritech discriminated against its customers in 1993 through 1995. Ameritech appealed the decision to certify the class, but the Eighth District Court of Appeals affirmed the trial court’s decision in 2017.

Ameritech appealed to the Supreme Court, which agreed to hear the case.

Court Examines Eligibility to Sue Service Provider
Ameritech asserted that Intermessage and the class members lacked standing to sue under R.C. 4905.61 because the PUCO never determined that the class members’ rights were violated.

The Court’s opinion began by examining the language of R.C. 4605.61. It provides that a utility that is found to have violated one of the statutory enumerated provisions or an order by the PUCO is liable in treble the amount of damages to “the person, firm, or corporation injured thereby,” “in consequence of the violation, failure, or omission” by the utility.

The Court applied the dictionary definitions of “injure,” “thereby” and “in consequence of” and determined the General Assembly intended to limit recovery of treble damages to those entities who were wronged as a result of the violation declared by the PUCO. The court stated that this depends on the terms of the PUCO’s finding or order. The order had to be examined to determine who had standing to bring an action.

The Court found the parties injured by the violations in the Cellnet matter related to discrimination against cell service resellers in the wholesale market not affiliated with Ameritech. The opinion stated that Intermessage was not a service reseller in the wholesale market, but a purchaser of cell service.

“The fact that Intermessage simply passed those costs on to its customers does not make Intermessage a reseller in the wholesale market,” the opinion stated. “Intermessage customers were not purchasing cellular service from Intermessage. Intermessage’s customers were purchasing an alarm system with backup features that relied on Ameritech’s cellular service.”

Intermessage and other retail purchases were “indirectly injured” by Ameritech and are not eligible under R.C 4905.61 to sue the company for treble damages, the Court concluded.

2017-0684. Satterfield v. Ameritech Mobile Communications Inc., Slip Opinion No. 2018-Ohio-5023.

View oral argument video of this case.

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