Opinion
NUMBER 2017 CA 0712
05-16-2018
LOUISIANA PUBLIC SERVICE COMMISSION, AND IN THEIR CAPACITIES AS COMMISSIONERS LAMBERT C. BOISSIERE, III, JAMES M. FIELD, FOSTER L. CAMPBELL, ERIC SKRMETTA, AND CLYDE C. HOLLOWAY v. LOUISIANA STATE LEGISLATURE
Brandon M. Frey Melanie Verzwyvelt Lauren M. Temento Baton Rouge, LA Attorneys for Appellants Plaintiffs - Louisiana Public Service Commission, Department of Public Service, and in their Capacities as Commissioners, Lambert C. Boissiere, III, James M. Field, Foster L. Campbell, Eric F. Skrmetta and Clyde C. Holloway Glen R. Petersen L.J. Hymel Michael Reese Davis Baton Rouge, LA Attorneys for Appellees Amended Plaintiffs - James M. Field and Foster L. Campbell
NOT DESIGNATED FOR PUBLICATION
Appealed from the 19th Judicial District Court In and for the Parish of East Baton Rouge, Louisiana
Trial Court Number 592231 Honorable Donald R. Johnson, Judge Brandon M. Frey
Melanie Verzwyvelt
Lauren M. Temento
Baton Rouge, LA Attorneys for Appellants
Plaintiffs - Louisiana Public
Service Commission, Department
of Public Service, and in their
Capacities as Commissioners,
Lambert C. Boissiere, III, James M.
Field, Foster L. Campbell, Eric F.
Skrmetta and Clyde C. Holloway Glen R. Petersen
L.J. Hymel
Michael Reese Davis
Baton Rouge, LA Attorneys for Appellees
Amended Plaintiffs - James M. Field
and Foster L. Campbell BEFORE: McDONALD, McCLENDON, WELCH, THERIOT, AND HOLDRIDGE, JJ. WELCH, J.
Plaintiffs, the Louisiana Public Service Commission ("LPSC"); its commissioners in their official capacities, Lambert C. Boissiere, III, James M. Field, Foster L. Campbell, Eric F. Skrmetta, and Clyde C. Holloway ("Commissioners"); and the Department of Public Service ("DPS"), appeal the trial court's judgment in favor of plaintiffs, James Field and Foster Campbell in their individual capacities, which certified this action as a class action and appointed James Field and Foster Campbell in their individual capacities as class representatives. For reasons that follow, we sustain a peremptory exception raising the objection of no cause of action noticed by this Court on our own motion, we vacate the judgment of the trial court, and we dismiss the third supplemental and amended petition herein with prejudice.
FACTUAL AND PROCEDURAL HISTORY
The factual and procedural history of the current dispute is intertwined with this Court's earlier opinion in this matter, Louisiana Public Service Commission v. Louisiana State Legislature, 2012-0353 (La. App. 1st Cir. 4/26/13), 117 So.3d 532. Essentially, on July 1, 2010, the LPSC and its Commissioners (collectively "original plaintiffs") filed suit against the Louisiana State Legislature ("Legislature"), seeking a declaratory judgment that 2009 La. Acts, No. 266 ("Act 226") and 2010 La. Acts, No. 633 ("Act 633") were unconstitutional. Both Acts 226 and 633 authorized the transfer of money from the three dedicated funds that fund the LPSC's operations into the state's general fund. The original plaintiffs claimed that it was unconstitutional for the Legislature to take special fee monies paid into statutorily dedicated funds and to apply them to another purpose, i.e., the state's general fund. In response, the Legislature filed a peremptory exception raising the objections of no right of action and no cause of action and a dilatory exception raising the objection of vagueness or ambiguity. Prior to the trial court's ruling on the exceptions, the original plaintiffs supplemented and amended their petition ("first amended petition") to add, as plaintiffs, three Commissioners—James Field, Foster Campbell, and Clyde Holloway—in their individual capacities as ratepayers ("amended plaintiffs") and to allege that the commissioners were ratepayers of one or more common carriers or public utilities regulated by the LPSC, i.e., jurisdictional ratepayers. The Legislature likewise responded by filing an amended peremptory exception raising the objections of no cause of action and no right of action. Louisiana Public Service Commission, 117 So.3d at 533-536.
The LPSC is a constitutionally created agency within the executive department and has the constitutional duty to manage the rates of public utilities and common carriers and to protect the interests of its jurisdictional ratepayers throughout Louisiana.
The LPSC's operations are funded with fees held in dedicated funds levied on and collected from its jurisdictional entities. The LPSC does not receive any monies from the state's general fund. Rather, the Legislature appropriates the entirety of the LPSC's funding from three statutorily created funds: (1) the Utility Carrier Inspection and Supervision Fund ("I&S Fund") (established by La. R.S. 45:1177); (2) the Telephonic Solicitation Relief Fund ("TSR fund") (established by La. R.S. 48:844.14); and (3) the Motor Carrier Regulation Fund ("MCR Fund") (established by La. R.S. 45:169.1). Notably, the public utilities and carriers, the motor carriers, and/or the telephonic solicitors remit the applicable fees to the Louisiana Department of Revenue for inclusion in the applicable fund dedicated to the LPSC's operations; the fees are never levied directly on the jurisdictional ratepayers (customers). However, under some circumstances, the cost of the fees paid by the regulated utility companies and carriers into the I&S Fund may be included in the rate ultimately paid by the jurisdictional ratepayers (customers) of the utility companies and carriers. According to the LPSC, any monies remaining in the funds at the end of the fiscal year are to be retained in their respective accounts and cannot revert to the state's general fund.
The trial court subsequently sustained the objection of no cause of action and the amended objection of no cause of action on the basis that Acts 226 and 633 were not unconstitutional, decreed that the other exceptions were moot, and dismissed the claims of the plaintiffs (both original and amended). A judgment in accordance with the trial court's ruling was signed on December 8, 2011. The original plaintiffs, the LPSC and its Commissioners in their official capacities, appealed and this Court reversed the judgment of the trial court. In doing so, this Court found that the trial court erred in determining the merits of the LPSC's constitutional challenges to Acts 226 and 633 on an objection of no cause of action. This Court then held that accepting the well-pleaded facts contained in the petitions as true, the LPSC had stated a cause of action to challenge the validity of the Legislature's sweep of the monies dedicated by statute to fund the LPSC into the state's general fund. This Court then remanded the matter for the trial court to rule on the Legislature's remaining exceptions. Louisiana Public Service Commission, 117 So.3d at 536-538.
Previously, a judgment and an amended judgment in accordance with the trial court's ruling was signed; however, those judgments lacked appropriate decretal language and the appeal was dismissed. See Louisiana Public Service Commission v. Louisiana State Legislature, 2011-0943 (La. App. 1st Cir. 11/9/11) (unpublished).
The amended plaintiffs, i.e., James Field, Foster Campbell, and Clyde Holloway in their individual capacities as jurisdictional ratepayers did not appeal the judgment of the trial court. The amended plaintiffs' failure to appeal the judgment sustaining the peremptory exception raising the objection of no cause of action formed the basis of a subsequent peremptory exception raising the objection of res judicata filed by the Legislature, which is hereinafter discussed.
On remand, the trial court set a hearing on the Legislature's pending objections of no right of action (both original and amended) and vagueness or ambiguity, as well as the amended objection of no cause of action as to the amended plaintiffs' claims. The Legislature responded by filing a peremptory exception raising the objection of res judicata as to the amended plaintiffs' claims, maintaining that those claims should be dismissed in light of the finality of the December 8, 2011 judgment against them, which they did not appeal. At the hearing, the Legislature withdrew the objections of vagueness or ambiguity and the amended objection of no cause of action. By judgment signed on March 27, 2014, the trial court overruled the objection of no right of action (both original and amended) as to all of the plaintiffs and overruled the objection of res judicata as to the amended plaintiffs. The Legislature filed a supervisory writ application with this Court, which was denied. See Louisiana Public Service Commission v. Louisiana State Legislature, 2014-0604 (La. App. 1st Cir. 8/11/14) (unpublished writ action).
On September 30, 2015, two of the amended plaintiffs (James Field and Foster Campbell in their individual capacities as jurisdictional ratepayers) filed a motion for leave to amend and supplement the petition for declaratory judgment. Therein, they requested that they be allowed to amend the petition for declaratory judgment to include other members of a class and to assert a claim for the return of the unconstitutionally transferred funds on behalf of a class of plaintiffs, i.e., the jurisdictional ratepayers. See La. C.C.P. art. 591. The trial court granted the motion for leave and James Field and Foster Campbell subsequently filed another amended and supplemental petition ("third amended petition"). In the third amended petition, James Field and Foster Campbell amended the pleadings to potentially include other members of a class, i.e., other jurisdictional ratepayers, to allow James Field and Foster Campbell to continue as representative parties, and to appoint Dennis Kelley to be appointed as another class representative. The relief sought in the third amended petition by James Field and Foster Campbell, individually as jurisdictional ratepayers, along with Dennis Kelley, and on behalf of the class, was "a return of any and all surplus fees which were transferred to the state's general fund ... by virtue of the passage of [Acts 226 and 633]" and that "[a]ny funds found by this Court to have been improperly or illegally transferred to the state general fund should be refunded to the jurisdictional ratepayers who paid these surplus fees."
The amended plaintiffs had previously filed a motion for leave to amend and supplement the petition for declaratory judgment on behalf of a class wherein they moved the trial court to approve certification of a class and to allow the second amendment of the petition for declaratory judgment so as to bring claims on behalf of a class of plaintiffs, which the trial court granted. However, due to various errors, those orders of the trial court, including its grant of leave to amend the petition, were reversed by this Court. See Louisiana Public Service Commission v. Louisiana State Legislature, 2014-1641 (La. App. 1st Cir. 2/23/15) (unpublished writ action); Louisiana Public Service Commission v. Louisiana State Legislature, 2014-1666 (La. App. 1st Cir. 2/23/15) (unpublished writ action); Louisiana Public Service Commission v. Louisiana State Legislature, 2015-0835 (La. App. 1st Cir. 9/18/15) (unpublished writ action); and Louisiana Public Service Commission v. Louisiana State Legislature, 2015-0908 (La. App. 1st Cir. 9/18/15) (unpublished writ action). Since the amended plaintiffs failed to obtain leave of court, the second supplemental and amended petition has no effect. See La. C.C.P. arts. 1151 and 1155.
The LPSC challenged the trial court's ruling granting the amended plaintiffs leave to file the third amended petition by filing a supervisory writ application with this Court. The writ application was initially not considered by this Court; however, it was subsequently denied. See Louisiana Public Service Commission v. Louisiana State Legislature, 2015-1872 (La. App. 1st Cir. 3/8/16) (unpublished writ action); Louisiana Public Service Commission v. Louisiana State Legislature, 2016-0358 (La. App. 1st Cir. 6/7/16) (unpublished writ action).
On June 10, 2016, James Field and Foster Campbell filed a motion to schedule a class certification hearing, which was heard on October 17, 2016. See La. C.C.P. art. 592. On December 6, 2016, the trial court rendered and signed a judgment "certify[ing] the class action as requested by [James Field and Foster Campbell] to include all persons, natural and/or juridical, who, between July 1, 2008 and June 30, 2010, were charged and paid fees pursuant to La. R.S. 45:1177 ([I&S] Fund), La. R.S. 45:169.1 ([MCD] Fund), and La. R.S. 45:844.14 ([TSR] Fund)." In addition, the trial court appointed "James Field and Foster L. Campbell as class representatives in connection with the [I&S] Fund, along with the [TSR] Fund." The trial court also granted leave "to file a motion to amend the class representation to allow the appointment of a class representative for the [MCR] fund." From this judgment, the LPSC appeals.
The trial court previously signed a judgment on October 27, 2016 denying class certification; however, in the December 6, 2016 judgment, the trial court vacated the October 27, 2016 judgment on the basis that it was "signed in error." As detailed hereinafter, since we are vacating the December 6, 2016 judgment on the basis that the third amended petition fails to state a cause of action for which the law provides a remedy, we need not address the propriety of the trial court's action in this regard, i.e., whether the December 6, 2016 judgment was an improper alteration of the October 27, 2016 judgment. See Frisard v. Autin, 98-2637 (La. App. 1st Cir. 12/28/99), 747 So.2d 813, 818-819, writ denied, 2000-0126 (La. 3/17/00), 756 So.2d 1145; Rebco Marine, Inc. v. Homestead Ins. Co., 96-1975 (La. App. 1st Cir. 12/29/97), 706 So.2d 508, 511.
Since we are vacating the December 6, 2016 judgment on the basis that the third amended petition fails to state a cause of action for which the law provides a remedy, we need not address whether this language in the judgment is "precise, definite, and certain" such that the trial court's ruling is evident without reference to other documents in the record." See Laird v. St. Tammany Parish Safe Harbor, 2002-0045 (La. App. 1st Cir. 12/20/02), 836 So.2d 364.
On appeal, the LPSC asserts that the trial court abused its discretion when it held that the class action plaintiffs satisfied the "objectivity" requirement of La. C.C.P. art. 591(A)(5), the "typicality" requirement of La. C.C.P. art. 591(A)(3), and/or the "adequacy of representation" requirement of La. C.C.P. art. 591(A)(4). However, because we find, for reasons detailed hereinafter, that the amended petition fails to state a cause of action for which the law provides a remedy, we pretermit consideration of the merits of the LPSC's assignments of error.
NO CAUSE OFACTION
It is well-settled that this Court can notice or raise the peremptory exception raising the objection of no cause of action on its own motion. See La. C.C.P. art. 927(B); Moreno v. Entergy Corp., 2010-2268 (La. 2/18/11), 64 So.3d 761, 762. The peremptory exception raising the objection of no cause of action tests "the legal sufficiency of the petition by determining whether the law affords a remedy on the facts alleged in the pleading." Everything on Wheels Subaru, Inc. v. Subaru South, Inc., 616 So.2d 1234, 1235 (La. 1993). No evidence may be introduced to support or controvert the objection that the petition fails to state a cause of action. La. C.C.P. art. 931. Therefore, the court reviews the petition and accepts well pleaded allegations of fact as true, and the issue is whether, on the face of the petition, the plaintiff is legally entitled to the relief sought. Everything on Wheels Subaru, Inc., 616 So.2d at 1235. Notably, however, conclusions of law asserted as facts are not considered well pled allegations of fact and the correctness of those conclusions are not conceded. Hooks v. Treasurer, 2006-0541 (La. App. 1st Cir. 5/4/07), 961 So.2d 425, 429, writ denied, 2007-1788 (La. 11/9/07), 967 So.2d 507.
We recognize that generally, in determining or reviewing the propriety of a class action certification, the court should not be concerned with whether the plaintiff has stated a cause of action or the likelihood of whether the plaintiff will ultimately prevail on the merits. See Robichaux v. State ex rel. Dept. of Health and Hospitals, 2006-0437 (La. App. 1st Cir. 12/28/06), 952 So.2d 27, 33, writs denied, 2007-0567 (La. 6/22/07), 959 So.2d 503, 504; Paradise v. Al Copeland Investments, Inc., 2009-0315 (La. App. 1st Cir. 9/14/09), 22 So.3d 1018, 1021. Indeed, class certification is procedural, and not dependent on the existence of a cause of action. See Hooks v. Treasurer, 2006-0541 (La. App. 1st Cir. 5/4/07), 961 So.2d 425, 429, writ denied, 2007-1788 (La. 11/9/07), 967 So.2d 507. However, class action suits have been dismissed for failure to state a cause of action before and after class certification. Id. Therefore, on an appeal of a judgment relative to class certification, nothing precludes this Court from raising the objection of no cause of action on our own motion in accordance with La. C.C.P. art. 927(B). See Hooks, 961 So.2d at 429 and 432-433 (on an appeal of a judgment granting class certification, the Court raised the objection of no cause of action on its own motion because the class, as certified, failed to state a cause of action).
In the first amended petition, the amended plaintiffs sought the same relief as the original plaintiffs, i.e., a declaration that Acts 226 and 633 were unconstitutional. In the third amended petition, James Field and Foster Campbell, individually as jurisdictional ratepayers and on behalf of the class of plaintiffs, claimed that in the event it was determined that funds were improperly transferred from the LSPC's dedicated funds into the state's general funds (i.e., Acts 226 and 633 were declared unconstitutional), then they (the jurisdictional ratepayers) were entitled to a return or refund of the improperly swept surplus funds, which they claimed to have paid. The threshold assertions of this claim, that Acts 226 and 633 are unconstitutional and that the funds swept by the legislature were paid by the jurisdictional ratepayers, is not based on well pleaded facts, but on legal conclusions clothed as fact. The correctness of the legal conclusion that Acts 226 and 633 are unconstitutional has not been determined; further, the correctness of the legal conclusion that funds swept by the legislature were paid by the ratepayers is contradicted by the statutes that establish the three dedicated funds that were swept—La. R.S. 45:1177 (the I&S Fund), La. R.S. 48:844.14 (TSR Fund), and La. R.S. 45:169.1 (MCR Fund). These statutes establish that the funds swept by the Legislature (pursuant to Acts 226 and 633) were funded by fees levied on and collected directly from the jurisdictional entities regulated by the LPSC—the public utilities and carriers, the motor carriers, and/or the telephonic solicitors—and were never levied directly on the jurisdictional ratepayers. Accordingly, we are not compelled to accept those legal conclusions as fact. See Hooks, 961 So.2d at 432.
Accepting all of the well-pleaded allegations of fact set forth in the third petition as true, even if Acts 226 and 633 are declared unconstitutional, the law does not provide the remedy of returning or refunding the fees levied to the jurisdictional ratepayers. If Acts 226 and 633 are declared unconstitutional and/or it is determined that the legislature improperly or illegally swept the fees, the remedy, if any, would be the return of the funds from where they were taken, i.e., the three dedicated funds that fund the operation of LPSC or the jurisdictional entities—the public utilities and carriers, the motor carriers, and/or the telephonic solicitors—that actually paid the surplus fees. The funds that were swept cannot be directly returned or refunded to the jurisdictional ratepayers because the jurisdictional ratepayers did not directly pay any of the levied fees.
Therefore, we must conclude that James Field and Foster Campbell, individually and on behalf of a class of plaintiffs, have failed to set forth a cause of action for which the law provides a remedy. Thus, we render judgment sustaining the peremptory exception raising the objection of no cause of action, properly noticed on our own motion. See La. C.C.P. art. 927(B). Further, we hereby vacate the December 6, 2016 judgment of the trial court and we dismiss the third amended petition herein with prejudice. See La. C.C.P. art. 934.
We note that our decision herein to raise the objection of no cause of action and to dismiss the claims seeking a return or refund of fees paid to the ratepayers, both individually and as a class, does not affect the cause of action seeking declaratory judgment as to the constitutionality of Acts 226 and 633, which was addressed in our earlier opinion, Louisiana Public Service Commission, 117 So.3d at 537-538. Thus, we have sustained a partial objection of no cause of action.
Generally, an objection of no cause of action should not be maintained in part; if there are two or more items of damages or theories of recovery that arise out of the operative facts of a single transaction or occurrence, a partial judgment on an objection of no cause of action should not be rendered to dismiss an item of damages or theory of recovery. Everything on Wheels Subaru, Inc., 616 So.2d 1239. However, if two or more actions are cumulated that could have been brought separately because they were based on operative facts of separate and distinct transactions or occurrences, a partial judgment may be rendered to dismiss one action on an exception of no cause of action, while leaving the other to be tried on the merits. Id. In such a case, there are truly several causes of action, and a judgment partially maintaining the exception as to one separate and distinct cause of action is generally appropriate. See also Hooks 961 So.2d at 429 (if a petition alleges more than one cause of action based on separate and distinct operative facts, the exception raising the objection of no cause of action may be sustained as to one cause of action and overruled as to another).
In this case, we find that the purported claim seeking the return or refund of fees paid to the jurisdictional ratepayers, both individually and as a class, arises out of operative facts that are separate and distinct from the operative facts giving rise to the action seeking declaratory judgment as to the constitutionality of Acts 226 and 633. More specifically, the operative facts giving rise to the action for declaratory judgment is the Legislature's act of passing Acts 226 and 633, which authorized the sweep of dedicated fees into the state's general fund, and pursuant to those acts, the transfer of those funds from the dedicated funds into the state's general fund. On the other hand, the operative facts giving rise to the purported claim by James Field and Foster Campbell, individually as jurisdictional ratepayers and on behalf of a purported class of plaintiffs, for the return of funds is a declaration that Acts 226 and 633 are unconstitutional and that it was improper for the Legislature to sweep the dedicated funds into the state's general fund, neither of which has yet to occur. Thus, we find that a partial objection of no cause of action is appropriate.
Since there are no additional facts that can be pleaded or established to provide James Field and Foster Campbell with a claim for the return or refund of fees which they never paid, but were paid by the LPSC's jurisdictional entities, the grounds for the objection of no cause of action cannot be removed by amendment of the petition. Therefore, it is unnecessary to permit the amended plaintiffs the opportunity to amend its petition.
CONCLUSION
For all of the above and foregoing reasons, we vacate the trial court's December 6, 2016 judgment, which certified this action as a class action and appointed James Field and Foster Campbell in their individual capacities as the class representatives. Additionally, the third supplemental and amended petition filed by James Field and Foster Campbell, in their individual capacities as jurisdictional ratepayers and on behalf of the class, fails to state a cause of action for which the law provides a remedy. Therefore, we sustain the peremptory exception raising the objection of no cause of action, properly noticed on our own motion, and we dismiss the third supplemental and amended petition with prejudice.
All costs of this appeal are assessed against the appellees, James Field and Foster Campbell in their individual capacities.
DECEMBER 6, 2016 JUDGMENT VACATED; JUDGMENT RENDERED SUSTAINING OBJECTION OF NO CAUSE OF ACTION AND DISMISSING THIRD AMENDED AND SUPPLEMENTAL PETITION WITH PREJUDICE. McClendon, J., dissenting.
I dissent solely for the purpose of pointing out the procedural defect in decertifying the class based on the peremptory exception raising the objection of no cause of action. Class certification is procedural and not dependent on the existence of a cause of action. Hooks v. Treasurer, 06-0541 (La.App. 1 Cir. 5/4/07), 961 So.2d 425, 429, writ denied, 07-1788 (La. 11/9/07), 967 So.2d 507. However, class action suits have been dismissed for failure to state a cause of action before and after class certification. Id.
Additionally, it appears the more appropriate exception in this case is one of no right of action. --------
In Hooks, the exception no cause of action was separate and distinct from the class certification. After certifying the class, the trial court heard various declinatory and peremptory exceptions. On the same day the trial court signed the class certification judgment, it signed a second judgment reflecting the interlocutory rulings of the trial court on the various exceptions. Hooks, 961 So.2d at 427-28. On appeal, this court did not vacate the class certification, but rather, on its own motion, held that the class, as certified, did not state a cause of action. Hooks, 961 So.2d at 429. The class was left intact, and the matter was remanded to allow the trial court to amend, recall, enlarge, restrict, or redefine the class or the issues subject to the class action. Hooks, 961 So.2d at 433. Accordingly, I find that the majority misapplied the holding in Hooks.
I also disagree with the majority's discussion in footnote 11 finding that the claims for a return of the fees and for a declaratory judgment arise out of separate and distinct operative facts. The operative facts giving rise to both claims were the passage of the acts and the sweep of the dedicated fees into the State's general fund. Therefore, this court's action that sustains a partial objection of no cause of action is not appropriate.
Accordingly, I respectfully dissent.