Huh et al v. United Water Corporation et al
Filing
45
OPINION & ORDER re: 18 MOTION to Dismiss Notice of Defendants' Motion to Dismiss Plaintiffs' First Amended Class Action Complaint and Request for Judicial Notice filed by Suez Water Resources Inc., Suez Water Westchester I nc., Suez Enviornnement North America Holdings, Inc., SUEZ WATER RESOURCES INC.; 33 MOTION to Dismiss Notice of Defendants' Motion to Dismiss Plaintiffs' Second Amended Class Action Complaint and Request for Judicial Notice filed by Suez Water Resources Inc., Suez Water Westchester Inc., SUEZ WATER RESOURCES INC. For the reasons stated above, the Court grants Suez Water's motion to dismiss the SAC, without prejudice to the Huh's right to pursue claims this Court after exhausting their remedies before the NYPSC. The Clerk of Court is respectfully directed to terminate the motions pending at Dkts. 18 and 33, and to close this case. SO ORDERED. (Signed by Judge Paul A. Engelmayer on 5/5/2017) (anc)
Suez Water now moves to dismiss under Federal Rules of Civil Procedure 12(b)(1) and
12(b)(6). Under Rule 12(b)(1), Suez Water argues that the Huhs lack standing, thus depriving
the Court of subject matter jurisdiction. And under Rule 12(b)(6), Suez Water argues that the
Huhs’ claims are barred by the doctrine of primary jurisdiction; that their claims are barred by
the filed rate doctrine; and that the operative complaint otherwise fails to state claims for which
relief may be granted.
For the following reasons, the Court dismisses this action based on the doctrine of
primary jurisdiction, without prejudice to the Huhs’ ability to pursue such claims in court after
first exhausting their remedies before the NYPSC.
I.
Background1
A.
Factual Background2
1.
The Huhs’ February–May 2014 Water Bill
Suez Water supplies water to the Huhs’ house in Ardsley, New York. SAC ¶ 47. In May
2014, Suez Water sent a water bill to the Huhs indicating that the Huhs had used 7,600 cubic feet
of water during the three-month period between February 14 and May 14, 2014, yielding, at the
1
The following summary of the Huhs’ factual allegations is drawn from the Second Amended
Complaint (“SAC”), Dkt. 28. In resolving defendants’ motion to dismiss, the Court assumes all
well-pleaded facts to be true and draws all reasonable inferences in favor of the plaintiffs. See
Koch v. Christie’s Int’l PLC, 699 F.3d 141, 145 (2d Cir. 2012). The Court also considered the
materials attached to the Declaration of Stephanie R. Feingold in Support of Defendants’ Motion
to Dismiss, Dkt. 34 (“Feingold Decl.”), largely bearing on primary jurisdiction, because each is
either incorporated by reference or is “integral” to the SAC, see Chambers v. Time Warner, Inc.,
282 F.3d 147, 152–53 (2d Cir. 2002), a “document that the plaintiffs either possessed or knew
about and upon which they relied in bringing the suit,” Rothman v. Gregor, 220 F.3d 81, 88–89
(2d Cir. 2000) (citation omitted), or a matter of public record, Pani v. Empire Blue Cross Blue
Shield, 152 F.3d 67, 75 (2d Cir. 1998).
2
The SAC contains allegations describing conduct by defendants or their predecessors towards
other customers. Because these allegations are not germane to the present motion to dismiss,
they are not summarized here. See SAC ¶¶ 5–36.
2
applicable rates, a bill of $548.83. Id. ¶ 48. The Huhs dispute that they used 7,600 cubic feet of
water during that period. They allege that during the same period in 2013, their water use,
according to their water bill, had been only roughly 1,500 cubic feet of water. Id. ¶¶ 2, 49–50.
The Huhs further claim that “during much of the billing period” at issue in 2014, they were away
from their home and that no person lived there. Id. ¶ 51. They also allege that a plumber
determined that the service plumbing and fixtures belonging to the Huhs were not leaking water
during the billing period. Id. ¶ 52. In sum, the Huhs claim their water bill for the 2014 period
“was inaccurate as to how much water plaintiffs had actually used during the billing period.” Id.
¶ 53.
After receiving the bill, on June 3, 2014, the Huhs claim they contacted Suez Water’s
customer service department, which the Huhs claim Suez Water holds out to “redress[] consumer
complaints and billing issues,” id. ¶ 1, to ask “why their bill was so unusually high.” Id. ¶ 54.
On that occasion and several others, the Huhs spoke with representatives of that department.
Each told the Huhs that, as a matter of company policy, Suez Water does not grant adjustments
or abatements for water bills. Id. ¶¶ 55–58. The Huhs allege that Suez Water representatives
also told them that if they did not pay the bill in full, then they would face penalties. Id. ¶¶ 59–
60. Based on Suez’s Water’s statements, the Huhs allege, they paid their water bill. Id.
2.
The Huhs’ Challenge Before the NYPSC
Suez Water, as a public water utility operating in New York, is regulated by the NYPSC.
As such, at all relevant times, Suez Water operated pursuant to an operative tariff approved by
the NYPSC.3 See Feingold Decl., Exs. D–E. The tariff set out the rates that Suez Water was
3
During the events at issue, Suez Water was known as United Water New Rochelle (“UWNR”),
and the water bill issued to the Huhs was in that name. On November 14, 2014, UWNR merged
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permitted to charge per unit of water use during the events at issue, as the tariff currently in place
also does. See id., Ex. E. The Huhs do not dispute that the rates on which their water bill was
based were in accord with the operative tariff.
The operative tariff also set out the following policy on abatements and refunds:
22.
(a)
(b)
Abatements and Refunds
There shall be no abatement of the minimum water rates in whole or in part,
by reason of the extended absence of the Customer, unless service has been
discontinued at his request, and no abatement shall be made for leaks or for
water wasted by improper or damaged service pipes or fixtures belonging
to the Customer.
If upon test of a meter upon complaint, it be found that the accuracy of the
meter (determined as provided for in the rules and regulations of the Public
Service Commission) exceeds the limits as set forth by the Commission, the
bills of the Customer shall be adjusted to the extent of such excess for onehalf of the quantity registered since the last test unless it can be shown that
the error is due to an accident or other cause, the approximate date of which
can be determined, in which case it shall be figured back to such date; or
unless the Customer has suffered no damage from said error by virtue of the
fact that the meter has registered a quantity of water less than that allowed
for the minimum rate of the applicable rate schedule.
Id., Ex. D at Leaf No. 41. The tariff thus provided a mechanism for relief for a Suez Water
customer to obtain a refund or abatement, where testing reveals that the accuracy of a water
meter did not meet the tariff’s standards. See id.; see also id., Ex. E at Leaf No. 46.
Although the Huhs’ SAC does not disclose this, the Huhs initially filed a “high bill”
complaint with the NYPSC challenging as excessive the $548.83 they paid. See id., Ex. A. On
October 1, 2014, the NYPSC notified the Huhs that their “request for an informal hearing . . . has
been granted. Our file shows your complaint concerns: high bill. Only this issue will be
decided.” Id. (emphasis in original). On May 2, 2016, however, the Huhs filed the initial
with United Water Westchester, Inc., and began operating under the latter’s name; on November
9, 2015, United Water Westchester, Inc. became Suez Water. See SAC ¶ 47 n.12.
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complaint in this case, Dkt. 1, and, on June 28, 2016, before a NYPSC hearing was held,
Youngja Huh administratively closed the Huhs’ NYSPC complaint. See Feingold Decl., Ex. B.4
As a result, the NYPSC has not had occasion to assess the Huhs’ challenge to the water bill in
question.
B.
This Lawsuit
On May 2, 2016, the Huhs filed their initial complaint, naming as defendants United
Water Corporation and GDF Suez Energy North America, Inc. Dkt. 1. On August 17, 2016,
after the instant defendants notified the Court that they are the proper defendants, the Court held
a conference and invited plaintiffs to file an Amended Complaint (“AC”). Dkt. 11. On August
24, 2016, the Huhs did so. Their AC named as defendants the two instant defendants and also
Suez Environment North American Holdings, Inc. Dkt. 12.5 On September 30, 2016, following
an initial motion to dismiss, Dkts. 18–20, the Huhs filed the SAC, the operative complaint here.
Dkt. 28.
The SAC claims that the $548.83 bill that Suez Water sent to the Huhs in May 2014 was
too high, because it was based on the premise that the Huhs had used approximately 7,600 cubic
feet of water during the three-month billing period. In fact, the SAC alleges, the Huhs used far
less water during that period. The SAC alleges that, in prior billing periods, the Huhs had used
approximately 1,500 cubic feet of water; that the Huhs’ home was unoccupied during much of
the billing period; and that the Huhs’ plumber has ruled out water leaks from service pipes and
fixtures as a cause of high water use. SAC ¶¶ 49–52. Thus, the SAC alleges, “the [water] bill
4
The record does not reflect whether the Huhs pursued such a hearing after receiving this notice
or why a hearing had not been held as of June 28, 2016.
5
The later SAC dropped Suez Environment North American Holdings, Inc. as a defendant and
added John Does 1–20 as defendants.
5
was inaccurate as to how much water Plaintiffs had actually used during the billing period.” Id.
¶ 53. The SAC separately faults Suez Water’s customer service department for inaccurately
stating, when contacted by the Huhs, that Suez Water “never grant[s] adjustments or abatements
on water bills, as a company policy.” Id. ¶ 55; see also id. ¶¶ 56–60. In fact, as noted, the
regulatory tariff provides customers with an avenue to obtain such relief.
Based on these allegations, the SAC brings claims for breach of contract, id. ¶¶ 81–82;
unjust enrichment, id. ¶¶ 83–86; negligence, id. ¶¶ 87–90; and fraud, id. ¶¶ 91–92; and alleges
violations of New York General Business Law § 349, which outlaws deceptive business
practices, id. ¶¶ 75–80. The Huhs seek to represent a class of more than 1,000 similarly situated
persons, id. ¶ 67, and assert a total amount in controversy exceeding $5 million, id. ¶ 43.6
On October 21, 2016, defendants filed a motion to dismiss the SAC, Dkt. 33, and, in
support, filed a memorandum of law, Dkt. 35, and the Feingold Declaration, Dkt. 34, which
addresses the Huhs’ intervening complaint before the NYPSC and various NYPSC regulations.
On November 10, 2016, plaintiffs filed a memorandum of law in opposition, Dkt. 38; on
November 18, 2016, defendants filed a reply, Dkt. 40. On January 26, 2017, the parties moved
to stay discovery pending resolution of the motion to dismiss, Dkt. 42, which, on January 27,
2017, the Court granted, Dkt. 43.
II.
Discussion
Suez Water contends, first, under Rule 12(b)(1), that the Court lacks subject matter
jurisdiction, because the Huhs fail to plead an injury in fact and therefore do not have standing to
sue. That argument lacks merit. Although the Huhs articulate other grievances—including
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CAFA’s requirement of minimal diversity is met because the Huhs allege they are New York
citizens and that one defendant, Suez Water Resources, Inc., is a Delaware and New Jersey
citizen for diversity purposes. Id. ¶¶ 37–42.
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challenging as misleading the alleged statements by Suez Water representatives to the effect that
the company would never adjust a deficient water bill—the Huhs also claim monetary injury.
They claim that the May 2014 bill for $548.83 was based on an excessive tabulation of their
water use. SAC ¶ 53. As relief, they seek monetary damages. Id. ¶ 92(b). Pecuniary injuries
such as those claimed by the Huhs are classic injuries in fact and are clearly cognizable. See
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992); see also Hein v. Freedom From
Religion Foundation, Inc., 551 U.S. 587, 621 (2007) (Scalia, J., concurring in judgment)
(describing “wallet injury” as an injury in fact).
Suez Water makes several arguments for dismissal under Rule 12(b)(6), including based
on the doctrine of primary jurisdiction, based on the filed rate doctrine, and for failure to state a
claim. At this time, the Court need only reach the first of these arguments.
“The doctrine of primary jurisdiction is concerned with promoting proper relationships
between the courts and administrative agencies charged with particular regulatory duties. The
doctrine’s central aim is to allocate initial decisionmaking responsibility between courts and
agencies and to ensure that they do not work at cross-purposes.” Ellis v. Tribune Television Co.,
443 F.3d 71, 81 (2d Cir. 2006) (quotations omitted). Courts invoke the primary jurisdiction
doctrine “whenever enforcement of the claim requires the resolution of issues which, under a
regulatory scheme, have been placed within the special competence of an administrative body.”
Id. (quoting United States v. W. Pac. R.R. Co., 352 U.S. 59, 64 (1956)). The doctrine applies to
claims better suited to determination by state administrative agencies as well as federal
administrative agencies, as either a “federal or state agency may have the requisite
competence. . . .” See Johnson v. Nyack Hosp., 964 F.2d 116, 122–23 (2d Cir. 1992)
(“Johnson I”).
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“Under the doctrine, a court defers to the agency for advisory findings and either stays
the pending action or dismisses it without prejudice,” mindful of the concern that the effect of
such action “not work a time-bar to claims that will in all likelihood be refiled in federal court
after the agency acts.” Johnson v. Nyack Hosp., 86 F.3d 8, 11 (2d Cir. 1996) (“Johnson II”).
Application of the doctrine does not constitute a determination that the court is dispossessed of
subject matter jurisdiction over the dispute, for the relevant claim must be “originally cognizable
in the courts.” Id. (quoting W. Pac. R.R. Co., 352 U.S. at 63–64). The doctrine is justified by the
interests in maintaining uniform regulation in an area entrusted to an administrative agency and
in utilizing administrative expertise in so regulating. See Ellis, 443 F.3d at 82.
Application of the primary jurisdiction doctrine is not governed by a rigid formula. It is
instead applied on a case-by-case basis. Courts generally look to four factors in determining
whether to invoke the doctrine: “(1) whether the question at issue is within the conventional
experience of judges or whether it involves technical or policy considerations within the
agency’s particular field of expertise; (2) whether the question at issue is particularly within the
agency’s discretion; (3) whether there exists a substantial danger of inconsistent rules; and (4)
whether a prior application to the agency has been made.” Id. at 82–83.
Here, viewed in combination, these factors strongly support application of the primary
jurisdiction doctrine.
First, the factual determinations on which the Huhs’ claim of an overcharge for water use
will turn are familiar to the NYPSC and implicate its technical expertise. In alleging that they
were charged for water they did not use, the Huhs complain that their water meter was
malfunctioning during the relevant time period in 2014. The entity resolving the Huhs’
challenge to their quarterly water bill of necessity needs to determine whether the Huhs’ water
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meter was functioning properly and within regulatory limits. As the NYSPC tariff reflects, such
determinations are ones commonly addressed by the NYPSC. A federal court, in contrast, has no
expertise in such matters. See Johnson I, 964 F.2d at 122–23 (affirming dismissal under primary
jurisdiction doctrine of plaintiff doctor’s claims based on hospital’s revocation of his surgical
privileges; court leaves it, in the first instance, to the New York Public Health Council, the state
agency responsible for determining whether there is a medical justification for withdrawing a
physician’s privilege to practice medicine, to assess whether revocation was supported by a
proper medical justification); see also Tassy v. Brunswick Hosp. Center, Inc., 296 F.3d 65, 69–71
(2d Cir. 2002) (primary jurisdiction doctrine not applicable when plaintiff doctor’s hospital
privileges were revoked based on allegations of sexual harassment, not medical or technical
incompetence; “[t]he primary factual issue is whether [plaintiff] committed the alleged sexual
harassment, the resolution of which does not require the [New York Public Health Council’s]
expertise”). Indeed, the Huhs themselves originally pursued this remedy before the NYPSC and
were granted an informal hearing by the NYPSC on their complaint of a “high bill,” although,
for unknown reasons, they abandoned it.
Second, the question at issue implicates matters of agency discretion. The NYPSC has
approved the operative tariff. It, in turn, sets the standards for water meter functionality and the
parameters under which abatements are to be awarded. Insofar as the Huhs seek recompense
based on an allegedly defective water meter, their SAC implicates those policy determinations.
Third, were the Court to resolve the Huhs’ claim without an initial assessment by the
NYSPC, there would be some possibility of inconsistent rulings or of a misapplication of the
governing regulatory standards. The Huhs’ claim of a material water meter malfunction ought to
be evaluated under the same standards, including as to the extent to which incidental water meter
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errors are tolerated, as claims by other customers who pursue remedies before the NYPSC. The
Court will benefit from the NYPSC’s assessment of the Huhs’ claim of an errant water meter
reading.
Finally, the Huhs made a prior application before the NYPSC; they withdrew their “high
bill” complaint before any hearing was held. See Feingold Decl., Exs. A–B. That, too, favors
application of the primary jurisdiction doctrine. See Ellis, 443 F.3d at 89 (“If prior application to
the agency is present, this factor provides support for the conclusion that the doctrine of primary
jurisdiction is appropriate.”) The Huhs’ initial pursuit of the NYPSC remedy reinforces that the
NYPSC is best equipped, in the first instance, to address the Huhs’ claims. If the Huhs are
entitled to relief from Suez Water within the coverage of the tariff, the NYPSC will assure that it
is provided.
These factors, viewed together, thus strongly favor recourse to the NYPSC, and indicate
that the justifications underlying the primary jurisdiction doctrine are abundant in this case. The
Huhs’ claim falls well within the NYPSC’s wheelhouse. And applying the primary jurisdiction
doctrine will mitigate the risk that the Court would otherwise wade into an area characterized by
technical or administrative expertise. See id. at 91 (“District courts should continue to apply
[the] four-factor test because each case turns on ‘whether the reasons for the existence of the
doctrine are present and whether the purposes it serves will be aided by its application in the
particular litigation.’” (quoting W. Pac. R.R. Co., 352 U.S. at 64)).
Pursuant to the primary jurisdiction doctrine, the Court therefore dismisses this case to
enable the Huhs first to pursue their claims before the NYPSC. This dismissal is, of course,
without prejudice to the Huhs’ right later to pursue claims in this Court to the extent their
grievances are not remedied before the NYPSC.
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