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FILED
September29 201,1
Ti Smith
IN THE SUPREME COURT OF THE STATE OF MONTANA
•SUPREMECOURTCAUSENO. DA1~3~t 7 7Th• 1 it~iLZt
DR. PAUL WILLIAMSON, REV. DR. VERN )
KLINGMAN, PATRICIA KLINGMN& : ~.
KUSSELLLDOTY;JAMESt& ) ~ crwz’thELIZABETHGRUBAapdLEOG.& )
JEANNE R. BARSANTI, I s ,u~ ur ~io
Appellants, ) .J. APPELLANT’S’.5. .*..
) OPENING BRIEFMONTANA PUBLIC SERVICE )
COMMISSION, and . )
NORTHWESTERN ENERGY. . ) ..
,Appellees. J ‘I
QN APPEAL FROM THE TH1RTEENT { JUDICIAL DIS C~ COURTYELLOWSTONE COUNI:, MONtANA
APPEARANCES
ATrORNEY Foa APPELLANTS AErrORNEYS FOR. RESPONDENTS.
Russell L. Doty, James C. Paine, Assistant Atty. General3878 N. Tanager Ln ., Atty. forMort. Public Service Comm’n.Billin~s,MT59102-5916 . POBox2O 601 . .
(406) 696-~842 Helena, MT, 59620-2601Fat ‘206-984-4876 (406) [email protected] . .. . jpaine2(~i,mj.gov
:. Monica 3. Tranel,
Attorney for NorthWestern Energy
Tranel, McCarter & Morcis, PLLP
. : . . Great Northçm Town Ce titer. .. • 30 West l4th Street, Suite 204..
~ Helena, MT 59601. . . @06) 513-1105
~ ~ • Fax:(406)513-1109 .. .
:: . . MTrane1cä~trane1firm.corn
S
TABLE OF CONTENTS
TABLE OF CONTENTS
TABLE OF CITATIONS iv
STATEMENT OF ISSUES
I) Was it clearly erroneous for the District Court to find: “The recordreveals that the amended complaintwas npt merely filed after notice of thehearing, but filed after the hearing was held and Order No. 7084a was issued?”
Answer: Yes. The record reveals the opposite; there was no notice ofhearing, and no hearing. So the Court erred 1
2) Should the Court give deference to the PSC’s expansiveinterpretation ofA.R.M. § 38.2.1207 in determining whether a proposedamendment to a petition ws Simely filed?
Answer: No. The rule is clear; appellants were justified in relying on it;and the PSC should follow it rather than change itretroactively to the dueprocess denial detriment ofappellants. ...~ 1
3) Did the Commission abuse its discretion in. refhsing to allow anamendment of appellant’s complaint?
Answer: Yes
.4) When ruling that Petitioners lacked standing, did the PSC commit anerror of law by failing to consider whether or not Petitioners were personsdirectly affected by MCA § 69-3-321 subparagraphs (b) & (c), or err by notinterpreting those latter subparagtaphs correctly?
Answer: Yes. When one considers the entire statute, the Appellant’shave standing to be seek justice beibre the PSC 1
5) Do any of the Petitioners have standing under any theory to bring aclass action seeking a remedy before the Public Service Commission that theyare being overcharged for inferior street lighting service by NorthWesternEnergy?
• Answer: Yes. The billing events intervening between initial applicationofNorthWestern’s fee and its ultimate payment by SILMD members andtaxpayers do nothing to add to the initial harm, namely the overcharge.
(. .
Petitioners are directly affected by a joint rate indorporated ina.contract ofwhich they are third-party beneficiaries. And Montana’s Constitution requiresa remedy for the, wrongs alleged that precludes the PSC’s ruling that standingto seek redress is not available 1
STATEMENT OF THE CASE 2
Appellant’s claim 2PSC Response 3The timely appeal to the District Court sAppeal to Supreme Court 6
STATEMENT OF FACTS 6
STANDARD OF REVIEW 12
Review of Factual Determinations 12Review ofAdministrative Rules 13Review of Statutory Construction, Due Process Questions & of Whether aComplaint States a Claim 13Review ofDenial ofMotion to Amend Pleadings 14
ARGUMENT 14
SUMMARY OF ARGUMENT ON ISSTJEs 1,2&3 14ARGUMENT ON ISSUE 1 15
Conclusions on Issue 1 17ARGUMENT ON ISSUE 2 17
Conclusions on Issue 2 23ARGUMENT ON ISSUE 3 25
Conclusions on Issue 3 27SUMMARY OF ARGUMENT ON ISSUES 4 & 5 28ARGUMENT ON ISSUE 4 29
Conclusions on Issue 4 32ARGUMENT ON ISSUES 32
Standing because there is no superceding cause 33Standing to protect constitutional rights 35Standing under the legal equivalent of all standing provisions doctrine.36Standing because two Appellants have special expertise 37Standing because Appellants are directly affect by a joint rate 38Standing as third party beneficiaries 38
II
Conclusions on Issue 5 39
CONCLUSION 40
CERTIFICATE OF SERWCE 41
CERTIFICATE OF COMPLIANCE 42
Ill
TABLE OF CITATIONS
Montana Cases -
BitterrootRiver Protective Ass ‘n v. Bitterroot Conservation Digt., 2011 MT 51, ¶11,359 Mont. 393, 251 P.3d 131 25
.Eschenbacher v. Anderson, 2001 MT 206, ¶ 22, 306 Mont 321, ¶ 22, 34 P.3d 87, ¶22 13,17
Farmers Coop. Ass ‘n v. Amsden, LLC, 2007 MT 286, ¶ 12, 339 Mont. 445, 171P.34690 25,26
Frontline Processing Corp. v. American Economy Insurance, 2006 Mont. LEXIS684; 2006MT 344; 335 Mont. 192;149 P.34 906 33,34
Glendive Medical Center, Inc. v. DPIIHS, 2002 MT 131, ¶ 15, 310 Mont 156, ¶15, 49 P.34 560,1115 13,23
OrjifIn v. Moseley, 2010 MT 132, ¶ 22, 356 Mont. 393, 234 P.34 869 14,27Grouse Mountain Assocs. v. Mont Dept ofPub. Serv. Reg., 284 Mont.-65, 69, 943
P.24 971, 973 (1997) 23Hawley v. Board ofOil and Gas Conservation, 2000 MT 2, ¶ 12,297 Mont. 467, ¶
12, 993 P.24 677, ¶ 12 39In reKovatch(1995), 271 Mont. 323, 326, 896 P.24 444, 446 12, 13, 17,24,32Interstate Prod. Credit Ass’n v. DeSaye (1991), 250 Mont. 320, 323, 820 P.2d
1285, 1287 13, 17Juro ‘s UnitedDrug v. Mont DPHHS, 2004 MT 117, ¶ 23, 321 Mont 167, ¶ 12, 90
P.34 388, ¶23 .‘ ~. 13,23,39Leev. State, 195 Mont 1,6,635 P.2d 1282, 1284-85 (1981) 37Matter ofSecret Grand Jury Inquiry, 170 Mont. 354, 357, 553 P.24 987, 990
(1976) 37Meagher v. Butte-Silver Bow City- County, 2007 MT 129, ¶ 13, 337 Mont. 339, ¶
13, 160 P.3d 552, ¶ 13 6Peuse it. Malkuch, 275 Mont.221, 226, 911 P.24 1153, 1156 (1996) 14, 27Redies v. Cosner (2002), 2002 MT 8611 11 13, 24,32.Reier Broad. Co. i’~ Mt. State Univ.- Bozeman, 2005 MT 240, ¶ 8,328 Mont 471, ¶
8, 121 P.3d 549, ¶ 8 25,26Smith v. Board ofHorse Racing (1998), 1998 MT 91 ¶ 5 13,24, 32Thornton v. Flathead Co., 2009 MT 367, ¶ 14, 353 Mont. 252, 220 P.3d
14,27
Iv
• StatutesMCA § 2-4-102 (8) & (9) 39MCA § 69-3-304 3MCA § 69-3-321 1, 5, 6,29, 30, 32,35MCA § 72-34-502 39
RulesARM~38.2.12o7 14Fed.R.C.P. Rule 13(f) 20Fed.R..C.P. Rue 15(a) 20Fed.R.C.P. Rule 21 20M. R. Civ. P. 12(b)(6) 16,17M. R. Civ. P. 15(a) 25M. R. Civ. P. 15(e) 14MJtCiv.P. Rule 17(a) 39
Treatises6 Wright & Miller, FederalPractice and Procedure: Civil § 1479, pp. 400-402 .20Law ofFederal Court Charles Alan Wright, 3’d Ed. 1976 20, 21,23,25
Constitutional ProvisionsArticlell~34 36Article II, § 16Articlell,~3 36Articlell, § 8 23
Federal CasesFoman v. Davis, 1962, 83 S.Ct. 227, 230,371 U.S. 178, 182, 9 L.Ed.2cj 222 21Fred Meyer, Incorp. v. Mutual Insurance Cc., 235 F. Supp. 540 (D. Or. 1964) ... 33Lone Star Motor Import v. Citroen Cars Coip., C.A. 5th, 1961, 288 F2d 69, 75... 21McLellan v. Mississ4pi Power & Light Co., C.A. 5th, 1976, 526 F.2d 870 20Polin v. Dun & Bradstreet, mc, C.A. 10th, 1975, 511 F.2d 875 21Sherman v. Hallbaiter, C.A. 5th, 1972,455 F.2d 1236 21Singleton v Wulff~ 428 U.S. 106,96 S.Ct. 2868, 49 L.Ed.2d 826 (1976) 38Staggers v. Otto Gerdau Co., C.A.2d, 1966,359 F.2d 292 21
V
I STAThMENT OF ISSUES2~3 1) Was it clearly erroneous for the District Court to,find: “The record reveals that4 the amended complaint was not merely filed after notice of the hearing, but filed5 after the hearing was held and Order No. 7084a was issued?”6 Answer: Yes. The record reveals the opposite; there was no notice of7 hearing, and no hearing. So the Court erred.S9 2) Should the Court give deference to the PSC’s expansive interpretation of
10 A.R.M. § 38.2.1207 in determining whether a proposed amendment to a petition11 was timely filed? . -
12 Answer: No. The rule is clear; appellants were justified in relying on it and the13 PSC should follow it rather than change it retroactively to the due process denial14 detriment ofappellants.15 .. .
16 3) Did the Commission abuse its discretion in reflising to allow an amendment of17 appellant’s complaint?18 Answer: Yes.1920 4) When ruling that Petitioners lacked standing, did the PSC commit an error of21 law by failing to consider whether or not Petitioners were persons directly22 affected by MCA § 69-3-32 1 subparagraphs (b) & (c), or err by not interpreting23 those latter subparagraphs correctly?24 Answer: Yes. When one considers the entire statute, the Appellant’s have25 standing to be seek justice before the PSC.2627 5) Do any of the Petitioners have standing under any therny to bring a class action28 seeking a remedy before the Public Service Commission that they are being29 overcharged for inferior street lighting service by NorthWestern Energy?30 Answer: Yes. The billing events intervening between initial application of31 NorthWestern’s fee and its ultimate payment by SILIMD members and taxpayers32 do nothing to add to the initial harm, namely the overcharge. Petitioners are33 directly affected by ajoint rate incorporated in a contract ofwhichthey are third-34 party beneficiaries. And Montana’s Constitution requires a remedy for the35 wrongs alleged that precludes the PSC’s ruling that standing to seek redress is not•36 available.37
I
I STATEMENT OF THE CASE23 Appellant’s claim. In a class action complaint (PSC Docket No.
4 D2010.2.14)to Montana’s Public Service Commission (PSC or Commission),
5 original Appellants (Dr. Paul Williamson, Rev. Dr. Vern Klingmasi, Patricia
6 Klingman & Russell L Doty—herein Williamson, etaL), alleged that
7 NorthWestern Energy (herein NorthWestern or NWE) is overcharging consumers
8 of its street lighting services an estimated $2.1 million a year. The overcharge
9 occurs in approximately 85% of the street lighting districts where NorthWestern
10 Energy owns the street lights. They aver that such rates, set by tariff, are
11 unjustified, unreasonable and unjustly discriminatory.1
12 They contend an overcharge of several million dollars has accumulated over
13 more than 16 years. It is costing taxpayers and ratepayers in Billings, Montana,
14 $61,000 a month or $720,000 a year too much for street lighting service.
IS Williamson, et a!. requested that the overcharges be eliminated or used to
16 fhnd purchase of light emitting diode (LED) street lights.2 They alleged that flew
17 lights would cut the energy charge (a separate component of the cost of lighting) in
18 half; produce better light; reduce the maintenance needed to sustain the luminaires;
19 and eliminate the ownership (infrastructure) charge component of the rate once the
Doe. Seq. 6.100; Item 2 in Administrative Record.2Doc Seq. 6.100; Item 2, ¶s 62-63 adopted by reference in Doc. Seq.
6.100; Item 16 in Administrative Record; Doc. Seq. 1.000, ¶ 24.
2
I more efficient LED street lights are paid for--in most cases in between three to five
2 years.3 Williamson et at allege that sustaining their.case will reduce costs by an
3 average of 82% in 85% ofthe districts where NorthWestern owns street lights.4
4 Williamson, et at requested the PSC to order an immediate rate reduction
5 subject to MCA § 69-3-304 allowing NorthWestern to collect back charges if the
6 rate reduction proved after hearing tc> be too great?
7 Williamson, et a?. contend6 that NorthWestern and the PSC have failed:
8 i. to establish a tariff to acconimocjate unmetered LED lighting,
9 ii. to require NorthWestern to allow poles on NorthWestern’s
10 system that have been paid for by ratepayers and taxpayers to be used
11 by Montanans who wish to install and own, city owned LEDs..
12 Williamson, et as’. also allege that they are third party beneficiaries of
13 contracts Northwestern has with cities and that they are entitled to have portions of
14 those contracts voided because they are unconscionable.7
15 PSC Response. Without noticing a hearing, without holding a hearing on
3Doc. Seq. 6.100; Item 2, ¶s II, IV, 51 & 52 Sc Tables 2 & 3, Col. F; l3oc.Seq. 6.100; Item 16, ¶ II, Tables 2 & 3, Col. F; Doc. Seq. 1.000, ¶ 26.
4Doc. Seq. 6.100; Item 2, ¶s 51 —57 adopted by reference in Doe. Seq.6.100; Item 16, ¶ 45; and Doc. Seq. 1.000, ¶ 23.
‘Doe. Seq. 6.100; Item 2, ¶s 3 & 85 adopted.by reference in Doe. Seq.6.100; Item 16, ¶F; andDoc. Seq. 1.000, ¶ 29.
6Doc. Seq. 6.100; Item 2, ¶s A, F, K, L & 49 adopted by reference in Doe.Seq. 6.100; Item 16; Doe. Seq. 1.000, ¶ 28.
~ Doe. Seq. 6.100; Item 2, ¶0 adopted by reference in Doe. Seq. 6.100; Item
16; Doe. Seq. 1.000, ¶ 30.
‘3
I the Complaint, and without ruling on the Complaint’s merits or allegations, or
2 otherwise initiating a proceeding on its own motion (as it Is authorized to do by
3 statute) to investigate the overcharge allegations and energy conservation
4 possibilities, the PSC ruled in Order No. 7084a that Williamson, et al, lacked
5 standing and dismissed the complaint. 8
6 Williamson, et al, filed an amended complaint adding James T. & Elizabeth
7 Gruba, and Leo 0. & Jeanne R. Barsanti as co-complainants9 and simultaneously
8 sought reconsideration. Order No. 7084d granted the motion for reconsideration in
9 part and denied it in part!°
10 However, contrary to the clearly stated provisions ofwhen a complaint
11 amendment is permissible (found in Commission Rule ARM § 38.11207), the
12 Commission (in considering “an issue of first impression”) establishing a
13 modification of its ARM to prevent amendment once a motion to dismiss a formal
14 complaint based on standing had been granted.1’
15 Williamson, etaL appealed those final “agency action” rulings of the PSC
16 subject to the Montana Administrative Procedures Act to Yellowstone County
8Doc. Seq. 6.100; Item 14 in Administrative Record, and Item 16 inAdministrative Record; Doc. Seq. 1.000, ¶31.
9DOC. Seq. 6.100; Item 16, ¶s 7a (1 —59) & 7b (1 —48) (Item 16 is also Doc.Seq. 1.000, Appendix D); Doc. Seq. 1.000, ¶ 33.
‘°Doc. Seq. 6.100; Item 17 in Administrative Record.“Doc. Seq. 6.100; Item 23 in Administrative Record, pp. 10 & 11, Findings
ofFact 29— 31. Doc. Seq. 1.000, ¶ 43.
4
1 District Court.
2 The timely appeal to the District Court sought a ruling on the questions:
3 Did the Public Service Commission err in its May 20, 2010, Order No. 7084a, and
4 its July 22, 2010, Order No. 7084d in finding that Williamson, et al. were not:
5 A. Entitled to Amend their Complaint after it was dismissed for lack of
6 standing?
7 B. Directly affected persons entitled to petition the PSC pursuant to MCA
8 § 69-3-321?
9 C. Third Party Beneficiaries of street lighting contracts between
10 NorthWestern Energy and the cities ofBillings and Missoula?
11 D. Experts entitled to standing to raise claims on behalf ofnon-expert
12 citizens before the PSC?
13 B. Entitled to bring a claim before the PSC under the Montana
14 Constitution’s entitlement to a clean and healthful environment?
15 In addition, Appellants’ appeal to the District Court sought a declaratory
16 judgment and ruling that the Public Service Commission abused its discretion and
17 erred in not immediately ordering a temporary street lighting tariff rate reduction in
18 SILMDs where the “ownership charge” component of the street lighting tariffhad
19 paid for the lighting infrastructure.12 To remedy this nonfeasance Appellants
‘2Doc. Seq. 1.000,
5
I sought a mandamus to compel the Montana Public Service Commission to perform
2 its mandatory duty under MCA § 69-3-321 to eliminate NorthWestern Energy
3 street lighting overcharges, set an unmetered rate for LEDs comparable to the rate
4 for current street lights, and allow use ofNorthWestei-n’s poles to house the new
5 technology.
6 Appeal to Supreme Court. This is a timely July 7,2011, appeal from the
7 June 9, 2011, Yellowstone County District Court order in Case No. DV 10-1450
8 granting the Motions (of the Montana Public Service Commission’3 and
9 Northwestern Energy’4) to Dismiss Appellants’ Appeal to the District Court.
10 STATEMENT OF FACTS1112 The District Court correctly noted that “all allegations of fact contained” in a
13 petition to the PSC “are taken as true” for purposes of dismissing the Williamson
14 et at petition pursuant to a Rule 12(bX6) motion.’5 Thus, the District Court was
15 bound to the following facts stated in the record:
16 1) Several different types ofpetitioners are involved in this case.
17 2) The original petitioners (or complainants) in the case were Dr.
18 Williamson, the Klingmans, and Mr. Doty.
13Doc. Seq. 16.000. -
‘4Doc. Seq. 17.000.‘5Doc. Seq. 16.000, p.4,11. 19-22; and Doe. Seq. 17.000, p. 6, 11. 2-5. This
determination is supported by Meagher v. Butte-Silver Bow City- County, 2007 MT129, ¶ 13, 337 Mont 339, ¶ 13, 160 P.3d 552, ¶ 13.
6
1 3) When the PSC ruled that the original petitioners did not have standing,
2 the original petitioners moved unsuccessfblly to amend their complaint to add the
3 Barsantis and Grubas as co-petitioners.
4 4) Dr. Williamson, the Klingmans, the Gnbas, and the Barsantis are all
5 customers ofNorthWestern energy. ‘6 For purposes of this class action, they
6 represent other similarly situated, customers ofNorthWestern.
7 5) Mr. Doty is a customer ofNorthWestern Energyand dads ~ reside
8 in a Street Lighting Improvement and Maintenance District S1LMD. ‘7He and Dr.
9 Williamson represent similarly situated, persons directly affected by NWE’s
10 inf&ior service from lights illuminating roadways they drive on and others directly
11 affected by climate change exacerbated by the unnecessary C02 emissions caused
12 by the waste of energy perpetuated by NorthWestern’s outdated street lights.
13 6) All petitioners, via their general property taxes, pay to help defray the
14 city’s and county’s pro rata share of. fees assessed to the city or county for general
15 street lighting when municipal property is in a SIIJMD where NorthWestern owns
16 and.maintains the street lights.’8 All petitioners represent similarly situated, general
17 propertytaxpayers who are directly affect by the fees NorthWestern charges their
16Doe Seq. 6.100; Item 2, ¶s 6 & 8; Doc. Seq. 6.100; Item 16, ¶s3, 5, 7a(1)& 7b(1); Doc. Seq. 1.000, ¶ 46.
‘7Doc. Seq. 6.100; Item 2, ¶s 9 & 10; Doc. Seq. 6.100; Item 16, ¶s 6 & 7;Doe. Seq. 1.000, ¶ 47.
18Doc. Seq. 6.100; Item 2,ifs 6 & 8; Doc. Se. 6.100; Item 16~, Ifs 3, 5, 7a(1)&7b(1);Doc. Seq. 1.000,1148.
7
1 local governmental units. These fee assessments do not appear as a separate line
2 item on their property taxes, but are included in the general mill levy.
3 7) The Grubas and the Barsantis live in SILMDs where NorthWestern
4 Energy owns and maintains the street lights.’9 For purposes of the class action,
5 they represent similarly situated like persons (i.e., folks residing in SILMDs who
6 are directly affected by NorthWestern’s ownership overcharge because their pro
7 rata share of it is reflected as a separate line on theft property tax bill).
8 .8) Dr. Williamson was a renter directly affect by NorthWestern’s
9 overcharge. He defrayed in rent he paid, part of the fee on the. property tax
10 statements for the dwelling wherein he resided. 20 He represents similarly situated
11 like persons (i.e., renters who pay rent that reflects the fee on the property tax. for
12 rental units that reflects the street lighting overcharge).
13 9) The Kllngmans and Doty reside outside of STLMDs.2’ For purposes of
14 the class action, they represent similarly situated like persons (i.e., follcs residing
15 outside of SILMDs but who help defray in general property taxes, the city’s and
16 county’s pro-nta share of street lighting fees in Sll~MDs where those governments
17 own property in SILMDs where NorthWestern owns and maintains street lights).
19Doc. Seq. 6.100; Item 16, ¶s 3, 5, 7a(l) & 7b(1); Doc. Seq. 1.000, ¶s 34 &49.
20J~c• Seq. 6.100; Item 2, ¶s 7 & 8; Dcc. Seq. 6.100; Item 16, ¶s 4 & 5;Doe. Seq. 1.000, ¶ 50.
21 Dcc. Seq. 6.100; Item 2, ¶s 5, 6,9 & 10; Doe. Seq. 6.100; Item 16, ¶s 2, 3,
6&7; Doe. Seq.~
8
1 10) Inthe interests of frill disclosure the Court shoujd know that Dr.
2 Williamson and the Klingmans have moved from Montana to be closer to their
3 children. Klingmans paid their property taxes through 2011 priorto leaving
4 Montana. These moves do not moot the request for ruling on class standing: At an
S appropriate time in the proceedings, they will be replaced by representative class
6 petitioners who are renters and Billings residents who do not live in an SILMD.
7 11) The tariffapproved by the Public Service Commission for street lighting
8 contains separate charges for energy used, for transmission and distribution of that
9 energy, charges to cover billing, operation, maintenance, USBC. and CTC-QF
10 expenses, and an “ownership charge.” 22
11 12) The “ownership charge” is levied to pay for the cost of street lighting
12 infrastructure, i.e., poles, pole bases, pole arm extensions, luminaires and wiring. 23
13 13) Once an “ownership charge” has completely paid for street lighting
14 infrastructure that it was intended to find, the “ownership charge” should cease.
15 .14) Because the ownership charge has not stopped, as it would have under
16 proper regulation by an alert Public Service Commission, an overcharge of several
17 million dollars has accumulated beginning more than 16 years ago. 25
~ Doe. Seq. 6.100; Item 2, ¶s 20—23 adopted by reference in Doe. Seq.
1.000, ¶ 17.23Doc. Seq. 6.100; Item 2, ¶s 19 Sc 24 adopted by reference.in Doc. Seq.
1.00.0, ¶18.2 Dcc. Seq. 6.100; Item 2, ¶ 27 adopted by reference inDoc. Seq. 6.100;
Item 16, ¶s 28- 34;.Doc. Seq. 1.000, ¶ 19.
9
1 15) The overcharge costs taxpayers and ratepayers in Billings, Montana, x2 $61,000 a month or $720,000 a year too much for street lighting service. 26
3 16) Savings in NorthWestern’s service area outside ofBillings would be at
4 least triple the amounts in the preceding paragraph.27
5 17) LED street lights used worldwide are providing better service than the
6 high pressure sodium (UPS) lights used by NorthWestern. ~
7 18) After the ownership overcharges are eliminated and energy charge
8 reduced, the average reduction ofthe street lighting bill in Billings lighting districts
9 where NorthWestern supplied the street lights would go down by 82%. 29
10 19) The S]I.MD assessment (and the property tax bill) would be lower by
11 approximately $87.05 a year for the Grubas and $74.11 a year for the Barsantis. 30
~ Doe. Seq. 6.100; Item 24s 35—41 & Tables 2 & 3; Seq. 6.100; Item 164s36—38 & Tables 2 & 3; and ¶s 35 & 39—41 ofthe original complaint adopted byreference in Seq. 6.100; Item 16; Doc. Seq. 1.000, ¶ 20.
26Doc. Seq. 6.100; Item 2,115 42—44 & 72; Seq. 6.100; Item 16, ¶s 43—45& 72; and ¶ 42 ofthe original complaint adopted by reference in Doe. Seq. 6.100;Item 16; Doc. Seq. 1.000,1121.
27Doe Seq. 6.100; Item 2, ¶ 84 adopted by reference in Doe. Seq. 6.100;Item 16, ¶ 22.
28Doc Seq. 6.100; Item 2, Ifs V, 58 -61 adopted by reference in Doe. Seq.6.100; Item 16; Doe. Seq. 1.000, ¶ 25.
29 Doe. Seq. 6.100; Item 2, ¶s 62—63 adopted by reference in Doc. Seq.
6.100; Item 16; Doe. Seq. 1.000,1127.30Doc. Seq. 6.100; Item 16, ¶s 7(a)(54) and 7(b)(44); Doe. Seq. 1.000, ¶ 35.
10
1 20) The Grubas have been overcharged approximately $291 and the
2 Barsantis have been overcharged approximately $620.65 for street lighting
3 services. Thus they are directly affected differently.3’
4 21) Persons in STLMD 261 where the Gnxbas are representative
5 Complainants have been overcharged approximately $28,296 in cumulative
6 overcharges and $707 in monthly overcharges for 45, 100 watt high pressure
7 sodium street lights in the district and persons in S1LMD 261 where the Barsantis
8 are representative Complainants have been overcharged at least $78,386 in
9 cumulative overcharges and $6,671 in annual overcharges for 29, 100 watt high
10 pressure sodium street lights in the district. Thus folks in different SILMDs are
11 directly affected differently.32
12 22) Cities also assess themselves to pay for their share of the light costs.33
13 23) Evidence continues to mount; fossil thel burning detrimentally impacts
14 our environment, health, water quality, air, and agricultural production. Solid data
15 indicate that direct effects,include:
16 a) the enlarged range of disease-bearing insects that will cause an additional
17 80 million cases ofmalariaa year;
31 Doc. Seq. 6.100; Item 16, ¶s 7(a) (49) Sc 7(bX38); Doc. Seq. 1.000,~[ 36.32 Doc. Seq. 6.100; Item 16, ¶s 7(a)(lO), 7(a)(32) Sc 7(a)(33) Sc
7(bX15)~7(b)(21) & 7(b)(22); Dec. Seq. 1.000, ¶ 37.~ Doc. Seq. 1.000, ¶ 38.
11
1 b) overwhelming upward stress on home insurance rates as climate
2 “weirding” produces freak storms and intensifies the strength of winds
3 worldwide;
4 c) complete elimination of late summer water flows in many rivers and
5 streams including those that have already occurred in Glacier Park;
6 d) additional dryness in Montana which is already 20% dryer now than a
7 century ago;
8 e) a 10% decline in wheat corn, and rice yields for every 1 degree Celsius
9 rise in temperature during growing periods;
10 ~ increased prairie and forest fires brought on by parched vegetation;
11 g) more summer heat waves that kill people because nighttime temperatures
12 do not cool enough to give victims relief from daytime heat;
13 h) increased desertification, (now including 1/5 of China) which will
14 eventually displace many from the land, and
15 i) 3-foot sea level rise within this century which, according to World Bank
16 maps, will displace more than 100 million people.
17 STANDARD OF REVIEW1819 Review ofFactual Determinations. The Supreme Court reviews a trial
20 court’s findings of fact to determine whether those findings are clearly erroneous.
21 In re Kovatch (1995), 271 Mont. 323, 326, 896 P.2d 444,446. A finding of fact is
12
1 clearly erroneous if substantial evidence does not support it, if the district court
2 misapprehended the effect of the evidence, or, if after reviewing the record, this
3 Court is left with a firm conviction that a mistake has been made. Eschenbacher v.
4 Anderson, 2001 MT 206, ¶ 22,306 Mont 321, ¶ 22,34 P.3d 87, ¶ 22 (citing
5 Interstate Prod. Credit Ass’n. v. DeSayc (1991), 250 Mont. 320, 323, 820 P.2d
6 1285, 1287).
7 Review of Administrative Rules. The Supreme Court generally applies
8 “the same principles in construing administrative rules as” it does “in construing
9 statutes. Glendive Medical Center, Inc. v. DPHHS, 2002 MT 131, ¶ 15,310 Mont
10 156, ¶ 15, 49 P.3d 560, ¶ 15 (citation omitted);” Juro ‘s UnitedDrug v. Mont.
11 DPRHS,2004MT117,p3,321 Mont 167,~J 12,90P.3d388,~J23.
12 Review of Statutory Construction, Due Process Questions & of Whether
13 a Complaint States a Claim. When the trial court’s construction of a statute,
14 whether due process has been afforded, or whether a complaint states a claim is
15 involved in an appeal to the Supreme Court the standard of review is de novo
16 review. Redies v. Cosner (2002), 2002 MT 86 ¶ 11 citing Kovatch, at 446; and
17 Smith v. Board ofHorse Racing (1998), 1998 MT 91 ¶ 5 [where deference of the
18 administrative hearing officer to racing steward’s opinion formed without input
19 from appellant prior to hearing made hearing afait accompli and therefore denied
20 due process because the hearing officer could not rule based on input from Smith;
13
1 i.e., Smiths testimony at the hearing in effect fell on deaf ears).
2 Review of Denial of Motion to Amend Pleadings. Generally, the Supreme
3 Court reviews a district court~s denial of a motion to amend pleadings to determine
4 whether the district court abused its discretion. Thornton 1’. Flathead Co. ,2009 MT
5 367, ¶ 14, 353 Mont. 252,220 P.3d 395 (citing Peuse v. Malkuch, 275 Mont.22 1,
6 226,911 P.2d1153, 1156(1996)); Grlffinv.Mosele,2olo~cr132 ¶22 356
7 Mont. 393,234 P.3d 869 (a district court’s decision denying leave to amend is
8 generally reviewed for an abuse ofdiscretion, except for a decision rendered
9 pursuant to M. R. Civ. P. 15(c), which is reviewed de novo). This is not a 1 5c
10 proceeding.
11 ARGUMENT1213 SUMMARY OF ARGUMENT ON ISSUES 1,2 & 31415 Because no PSC hearing had been scheduled or conducted on Appellant’s
16 PSC petition, Appellants should have been allowed, pursuant to ARM § 38.2.1207
17 and overwhelming federal procedural case law, to amend their complaint before
18 the PSC by adding parties and allegations concerning those parties. The District
19 Court’s ruling that a PSC hearing had been held prior to the amendment was
20 clearly erroneous because no hearing was noticed or held.
21 The District Court’s further determination that appellants’ amendment was
22 prevented by ARM § 38.2.1207 was erroneous because it was based on a false
14
1 determination of fact, which ifcorrectly determined would have required a
2 different outcome because the PSC’s rule allowed amendment.
3 The District Court abused its discretion in not requiring application of the
4 clearly stated ru1e.~ The PSC abused its discretion by not applying its own rule or in
5 failing to reasonably exercise the discretion afforded by that rule.
6 ARGUMENT ON ISSUE 178 Was it clearly erroneous for the District Court to find: “The record9 reveals that the amended complaint was not merely filed after notice of
10 the hearing, but filed after the hearing was held and Order No. 7084a11 was issued?”12 Answer: Yes. The record reveals the opposite; there was no notice13 of hearing, and no hearing, so the Court erred.1415 Prior to notice of hearing or hearing, 109 days after filing their complaint,
16 and 10 days after it had been dismissed because Williamson, et al. allegedly lacked
17 standing, Appellants amended their original complaint adding petitioners and
18 alleging facts substantiating how they were directly affected by the actions of
19 NorthWestern.34 Simultaneously, Williamson, et a!. also sought reconsideration by
20 the PSC, such reassessment to include evaluation of the new complaint. ~
21 The PSC refhsed to allow the proposed amendment to the complaint and.
22 without notice of hearing or hearing, denied the request for reconsideration.36
34Doc. Seq. 6.100; Item 16 (Also found at Doc. Seq. 1.000, Appendix D).35Doc. Seq. 6.100; Item 17.36Doc. Seq. 6.100; Item 23, pp. 10 Sc 11, Findings ofFact 29— 31.
15
7
8
9
10
11
12
13
14
15
16
17181920
1 Williamson, et aL then appealed to the District Court37
2 On page 7 of the Order and Memorandum Granting NorthWestern Energy’s
3 Rule 12(b)(6) Motion to Dismiss (MTD)38 the District Court mistakenly found:
4 “The record reveals that the amended complaint was not merely filed after notice
5 ofthe hearing, but filed after the hearing was held and Order No. 7084a was
6 issued.”
When counsel for Williamson, et a!. read the preceding sentence,he called
counsel for the Public Service Commission to verify that in facta hearing had not
been noticed or held. To his credit, Counsel for the PSC verified the recollection of
appellant’s counsel—no hearing was noticed or held.
Therefore, the Court’s unsubstantiated statement to the contrary
notwithstanding, this finding is without any basis in the record. Further it directly
contradicts the Court’s finding on page 7 of the Order and Memorandum Granting
the Montana Public Service Commission’s Rule 12(b)(6) Motion to Dismiss. There
the District Court finds, contrary to its determination in the companion (i.e.,
NorthWestern Energy) order:
The allegations unrelated to the issue. of standing contained within thepetition are not ripe for review because the PSC did not conduct a hearingor investigation into the substance ofPetitioners’ complaint. [Emphasisadded] ~
37Doc. Seq. 1.000.38 Doc. Seq. 17.000, p. 7.
39Doe. Seq. 16.000, p. 7.
16
12 Conclusions on Issue 1: Pursuant to the Kovatch, Esehenbache, and
3 interstate Prod Credit Ass’n. cases cited above, the Supreme Court reviews factual
4 determinations by a District Court to see if they are “clearly erroneous.” Applying
5 this standard, it is clear that the page 7 finding is “clearly erroneous” because:
6 1) the Court’s findings are contradictory, leading to the realization that the
7 district court misapprehended the effect of the evidence;
8 2) substantial evidence does not support it since the page 7 finding in Order
9 Granting NorthWestern Energy’s Rule 12(bX6) Motion to Dismiss is
10 without a factual basis in the record; and
11 3) counsel for the Commission has confirmed that no hearing was noticed or
12 held, leaving this Court with none other than the firm conviction that a
13 mistake has been made.
14 The District Court’s clearly erroneous finding undernthies its determination
15 that the PSC followed its own nile in refusing to allow Appellant’s amended
16 petition. Since that determination was arrived at in err, the Supreme Court must
17 now address the issue ofwhether the PSC adhered to its own rule when refusing to
18 allow an amendment adding parties and other allegations to Appellant’s petition.
19 ARGUMENT ON ISSUE 22021 Should the Court give deference to the PSC’s expansive interpretation22 of A.R.M. § 38.2.1207 in determining whether a proposed amendment23 to a petition was timely filed?
17
I Answer: No. The rule is clear; appellants were justified in relying2 011 it; and the PSC should follow it rather than change it retroactively to3 the due process denial detriment of appellants.45 None ~f the Appellants in the original Feb. 10,2010, petition before the NC
6 lived in a Street Improvement and Lighting District (SItLMD). During PSC
7 internal, non-hearing deliberation (which was and is available to the public via an
8 internet feed40), Commission Counsel opined that even if Williamson, the
9 Klingmans, or Doty had been members of a SILMD, they would not have standing
10 because they would not be “directly affected.” Why? Because the city pays the bill
11 for the street lighting fees, he opined, and then allocates those fees to individual
12 property owners in a SILMD, who in turn pay the fees appearing on their property
13 tax bill.4’
14 Nevertheless, the Commissioners seemed to invite Williamson, ci’ cii. to
15 refile a new complaint alleging new theories under which they would have
16 standing or at least clarii3dng their right to do so. For example, one colloquy went:
17 [59:17] Toole: Mr. Chairman, in addition I assume the complainants18 would be able to resubmit a complaint citing a different rationale.19 Paine: Commissioner Toole, that’s always possible, yes. 42
40 See Appendix A to this brief. Or go to
.4 httv://nsc.mt.~ov/Docs!worksessjofls/worksessjo~udjo/9ve2o 10 and click onlink to Part I ofMay 18, 2010, Montana PSC work session discussion on OriginalPetitioners’ Complaint in PSC Docket No. D2010.2.14 beginning at 5:44 minutesinto the audio file.
4 41 Appendix A, supra, pp.4 Sc 6. Or at i1:55and 18:55 minutes into theaudio file.
42Appenthx A, supra, p. 22. Or at 59:17 minutes into the audio file.
18
12 Rather than file a completely new petition naming SILMD members or cities
3 as petitioners, on May 30, 2010, Williamson, eta!, amended their class action.43
4 They added four petitioners who actually live in SILMDs” and alleged additiox~al
5 facts substantiating how all petitioners were directly affected by the actions of
6 NorthWestern (further discussion of which is in Issues 4 & 5 below).
7 This Court will decide whether it was correct for Williamson et at to believe
8 that absent any other written direction, Appellants had a right to amend theft
9 complaint under Commission Rule A.R.M. § 38.2.1207 as asserted in the their
10 Request for Reconsideration. L~
11 In their request for reconsideration, Williamson, et at averred:
12 Amendments to pleadings are allowed as a matter of right under the13 Commission’s rule until a hearing has been noticed.14 Tn the Courts, liberal1leading amendments are allowed as long as that15 does not prejudice a party.41617 The Commission’s rule referenced by WiUiamson, et at is ARM §
18 382.1207.Itstates:
19 Any pleading or document may be amended prior to notice of the20 hearing. After notice of a hearing is issued, motion for leave to amend any21 pleading or document may be filed with the commission and may be
43Doc. Seq. 6.100; Item 16 (Item 16 is also found at Doc. Seq. 1.000Appendix D).
441d..at ¶s 7(a)(l-59) & 7(b)(1-48).45Doc. Seq. 6.100; Item l7,p. 1.46
19
I authorized in the discretion of the commission or the hearing examiner.2 [Emphasis addedj34 Following a clear reading of the Commission’s rule, because no notice of
5 hearing or hearing had taken place, Williamson, et al. believed that they were
6 allowed to amend as a mater of right. Briefing the issue, Williamson, et cii. also
7 explained: ‘~
8 Even ifamendment were not allowed as a matter ofright, amendment9 “may be authorized in the discretion of the Commission.” Even thout it
10 was not necessary, Complainants have previously [on April 2, 2OlO~]11 requested permission to amend the pleadings as new data was developed.12 That request has never been ruled on. it is j~ now mooted by the series of13 events that have transpired. [Emphasis and bracketed material added for14 appeal to Supreme Ct.]15 While the Commission’s rule allowing amendment should be16 dispositive, if there is a need to know what is done in federal pleading.17 generally followed in state rules of civil procedure, the Commission is18 referred to The Law ofFederal Courts, Charles Man Wright, 31t1 Ed. 1976, a19 Hornbook on pleading. Itpovides at page 310:2021 The provisions of Rule 15(a) allowing amendment as of right22 should control over other, more guarded, provisions of the rules. Thus,23 while the cases are divided, the better view is that so long as24 amendment as of right is possible, a parts’ may amend to add an25 omitted counterclaim without satisfying the test ofRule 13(f) [cites26 omjttecjl and may add or drop parties without obtaining a court order27 under Rule~ [Emphasis added.]28
~ [Doe. Seq. 6.100; Item 22, pp. 2-41 ..., pp. 2-4. [Bracketed material added
for appeal to Supreme Ct.}48Doc. Seq. 6.100; Item 9, p. 4, line 6 in Administrative Record.‘~ Citing McLellan v. Mississippi Power & Light Co., C.A. 5th, 1976, 526
F.2d 870, citing the divided cases from the district courts. See also 6 Wright &Miller, Federal Practice and Procedure: Civil § 1479, pp.400-402.
20
I In discussing the conditions under which leave to amend should be2 granted after amendment by right is no longer possible, Wright notes at page3 311:4 The rule provides, however, that “leave shall be freely given5 when justice so requires.” and refusal to permit amendment is an6 abuse of discretion in the absence of some justification for the7 refusal.5° ... The test whether amendment is proper is fiinótional rather8 than conceptual. It is entirely irrelevant that a proposed amendment9 changes the cause ofaction or the theory of the case, or that it states a
10 claim arising out of a transaction different from that originally sued11 on, or that it causes a change in parties.5’ Normally leave to amend12 should be denied only if it would cause actual prejudice to an adverse13 party. .. - [Emphasis added.]1415 Not Necessary for Complainants to Refile. Wright also addressed “~
16 very strange distinction” found in some early cases that required dismissal of17 a defective complaint making it necessary for complainants to start over18 again. He says:19 Such a distinction had no support in thelanguage ofRule 15(d)20 and was the kind of arbitrary and mechanical procedural barrier that21 the rules generally do not countenance.2223 As this Court can see from this quote, this issue was extensively briefed by
24 Williamson etaL at the Commission and District Court levels, ax~d Appellant’s
25 position was well grounded in law. Nevertheless; without distinguishing the strong
26 law supporting Appellants’ position, and without correctly citing any law
27 supporting the Commission, the District Court opined, “It is inconceivable to
50CitingFoman v. Davis, 1962,83 S.Ct. 227,230, 371 U.S. 178, 182,9.L.Ed.2d 222; Lone Star Motor Import v. Citroen Cars Coip., C.A. 5th, 1961,288F2d 69, 75; 6 Wright & Miller, Federal Practice and Procedure: Civil §~ 1484,1487.
~‘ Citing Sherman v. Hallbauer, C.A. 5th, 1972,455 F.2d 1236; Polin v. Dun
ci Bradstreet, mc, C.A. 10th 1975, 511 F.2d 875; Staggers v. Otto Gerdau Co.,C.A.2d, 1966, 359 F.2d 292; and cases cited 6 Wright & Miller, Federal Practiceand Procedure: Civil § 1474 nn. 98-10.
21
~j. 1 providePetitioners with a second bite of the apple in this situation. Their amended
2 complaint was simply filed too late to warrant consideration by the PSC.”
3 Notwithstanding the fact that appellants 4/2/2010 motion for leave to amend
4 went undecided by the Commission, amendment of their 2/11/2010 petition within
5 109.~ys of its original filing, prior to any hearing being scheduled, and within 61
6 days of their motion for leave to amend going undecided, is hardly a late filing
7 under the controlling PSC rule, ARM § 38.2.1207. Under these time constraints,
8 appellants scarcely got a nibble at the apple, let alone a first bite.
9 The Court’s untimeliness rationale is based on the misconception that
10 Williamson, et at’ amendment came after a hearing, when in fact no hearing was
11 held.
12 Further the “Appellant’s should not get a second bite of the apple”
13 argument—the only other rationale adopted by the Court justifying its ruling, is not
14 avoided by denial ofAppellants’ amendment. As Appellant’s have pointed out and
15 as was agreed by Commission counsel in his clarification to Commissioner Toole
16 quoted above at footnote 42, appellant may still file a separate petition with the
17 Commission naming only Barsantis and Grubas and thus get another bite at the
18 apple. Then if the Commission persisted on denying standing, that pase would have
19 to be appealed separately or perhaps consolidated on appeal. Thus, all the
22
I Commission’s and District Court’s rulings do is drive up Court costs and increase
2 litigation time for everyone involved.
3 The futility ofthis approach taken by the Commission and District Court
4 was realized by Wright.
.5 In this case, no deference should be given to the PSC’s nile
6 interpretation. This Court isnot compelled to give “great weight” to an
7 application ofan agency rule that is inconsistent with the plain reading of the rule
~8 and which also denies Williamson, et aL due process. That is, it does “not defer to
9 an incorrect agency decision. See Juro ‘s,.supra at ¶ 12; Grouse Mountain Assocs.
10 v. Mont. Dept. ofPub. Sen.’. Reg., 284 Mont. 65, 69,943 P.2d 971, 973 (1997).
11 This request to the PSC isgovenied by the Montana Constitution’s, Article
12 II, § 852 which requires:
13 “... such reasonable opportunity for citizen participation in the operation of14 the agencies prior to the final decision as may be provided by law.1516 The reasonable participation provided by law was Appellant’s right to
17 amend their pleading as allowed by ARM § 38.2.1207.
18 Conclusions on Issue 2: Pursuant to the Glendive Medical Center, and
19 Juro ‘s cases cited above, the Supreme Court reviews an agency’s interpretation of
20 its rules using the same principles in construing administrative rules as it does in
21 construing statutes.
52Doc. Seq. 1.000, at ¶ 57.
23
I Pursuant to the Redies, Kovatch, and Smith v. BoardofHorse Racing cases
2 cited above, when the trial court’s construction of a statute, or ofwhether due
3 process has been afforded.appellants, the standard of review is de nova.
4 Applying this standard, it is clear that the PSC’s interpretation is inàonsistent
5 with the spirit of its own rule. That interpretation completely ignores the rule’s
6 plain meaning. The Commission’s after-the-fact interpretation of this unambiguous
7 rule clearly denies due process.
8 The PSC’s ruling is in excess of the statutory authority of the agency
9 because it cannot in effect establish a new rule to replace ARM § 38.2.1207
10 without a proper rulemaking. The newly articulated rule was made upon unlawful
11 procedure in that the PSC changed the rules, of the game without adequate notice
12 midstream and contradicted its own rule, namely ARM § 3 8.2.1207.
13 Further, the new “first impression” interpretation serves no valid purpose
14 except to delay justice since appellants may simply circumvent the ruling by filing
15 a new complaint. Therefore, the rule’s interpretation is “clearly erroneous.”
16 If the Court is inclined to read the rule as it was intended, then the result is
17 clear, i.e., the PSC committed error because its interpretation is outside the range
18 of reasonable interpretation permitted by the rule, and the ruling on this issue can
19 end there because Appellant’s amendment was submitted prior to a notice of
20 hearing.
24
1 Ifhowever, this Court rules ARM § 3 8.2.1207 does not afford Williamson,
2 et aL a right to amend prior to notice ofhearing as is clearly and unambiguously
3 stated in the rule, then the Court must determine whether the PSC abused its
4 discretion in refhsing to allow the amendment.
5 ARGUMENT ON ISSUE 367 Did the Commission abuse its discretion in refusing to allow an8 amendment of appellant’s complaint?9 Answer: Yes.
1011 “A district court abuses its discretion when ‘it acts arbitrarily, without
12 employment of conscientious judgment, or in excess of the bounds of reason
13 resulting in substantial injustice.” Bitterroot River Protective Ass ‘ii. v. Bitterroot
14 ConservafionDist.,20111v1J51,1f11,3s9Moflt3932sl P.3d131.
15 Much of the discussion of this question is found in Professor Wright’s above
16 analysis, which is adopted by reference here.
17 Further, Montana’s Supreme Court has ruled in Farmers Coop. Ass ‘ii. v.
18 Amsden, LLC, 2007 MT 286, ¶ 12,339 Mont. 445, 171 P.3d 690 (quoting M. R.
19 Civ. P. 15(a)) that:
20 Reier Broad. Ca. v. Mt. State Univ. - Bozeman, 2005 MT 240, ¶8,32821 Mont 471, ¶ 8, 121 P.3d 549, ¶ 8. M. it Civ. P.15(a) ¶5 provides that “leave22 [to amend] shall be freely given when justice so requires.” A district court23 “is justified in denying a motion for an apparent reason such as undue delay,24 bad faith or dilatory motive on the part of the movant, repeated failure to25 . cure deficiencies by amendments previously allowed, undue prejudice to the26 opposing party by allowance of the amendment, futility of the amendment,
25
I etc.” Bitterroot Inter. Sys., ¶50 (citations and internal quotation marks2 omitted).34 This case law, which governs District Courts, is likely applicable as well to
S the portion of the PSCs rule allowing an amendment at the discretion of the PSC.
6 None of these reasons listed in Farmers Coop.or Reier for denying amendment of
7 a complaint exist here. Indeed, the PSC or the District Court did not expressly
8 adopt any of the permissible justifications for upholding the refusal to allow
9 Appellants’ amendment.
10 NorthWestern made no claim that it would be prejudiced by the amendment.
11 Williamson, a’ al. have averred that prejudice was not present since NorthWestern
12 still had a right to develop its case and present it in an orderly, full contested case
13 hearing.53
14 The undue delay has been caused not by Williamson, a’ a!., but by the PSC
15 and NorthWestern’s action which forces an unnecessary filing by Appellants of a
16 new complaint naming only Barsantis and Grubas. No one in these proceedings
17 alleges that Appellants’ amendment was interposed for a dilatory motive. There
18 was no previously allowed amendment ofthe complaint, so there could be no
19 “failure to cure deficiencies by amendments previously allowed.”
20 Williamson, a’ al. were not acting in bad faith in amending their complaint
21 to add parties and provide additional reasons for requesting the PSC to perform its
53Doc. Seq. 6.100; Item 22, p. 3.
26
I job of writing down phantom street light rate base and eliminating the portion of
2 the rate that is going to defray the cost of street lighting rate base that has been
3 fully paid for.
4 The amendment was not fUtile because it alleged facts, as addressed more
5 fully in the Issue 4 & S discussions, related to the original and new petitioners that
6 adhered to the statute granting standing~
7 In addition, NorthWestern had not already expended “substantial effort and
8 expense” in the course of the dispute that “would be wasted” ifWilliamson, et aL
9 were allowed to proceed with additional parties and facts.
10 Conclusions on Issue 3: Pursuant to the Thornton, Peuse, and Grj[fln cases
11 cited above, a district court’s decision denying leave to amend is generally
12 reviewed for an abuse of discretion.
13 Again the only rationale for upholding a denial of the amendment by
14 Williamson, et aL was that it was untimely because the District Court incorrectly
15 thought it was made after a hearing.
16 Under the rules ofpleading, “leave shall be freely given when justice so
17 requires.” and refusal to permit amendment is an abuse ofdiscretion in the absence
18 of some justification for the refusal.
19 Since the rule is clear and since no reason for denying Appellants’
20 amendment existed under law currently followed by this Court, the amendment
27
1 should have been allowed. To disallow it was arbitrary and capricious and
2 characterized by an abuse ofdiscretion;
3 SUMMARY OF ARGUMENT ON ISSUES 4 & 545 Appellants have standing to bring a complaint challenging unconscionable
6 street light rates and inadequate energy wasteful service because they are “persons”
7 that are “directly affected” by:
8 1) “inadequate,” wasteful street lighting “service” that uses more than twice
9 the energy necessary while providing only inferior light;
10 2) the “insufficient practice” of local governments performing a billing
II “service” for NorthWestern in allocating unreasonable, exorbitant street
12 light rates;
13 3) a NorthWestern Street light overcharge that is not altered in anyway by
14 any intervening billing event or other superseding cause changing the
15 unjust harm inherent in the original rate gouging;
16 4) the “unjust joint rates” charged by NorthWestern Energy and local
17 governments for street lighting “service”;
18 5) climate change events caused by C02 emissions from the 1.mnecessary
19 burning of fossil fuel that helps destroy Montanans constitutional right to
20 a clean and health±h1 environment, a result which is of such overriding
21 public moment that standing is afforded to confront it; and
28
1 6) contracts between cities and NorthWestern benefiting them as real third
2 parties in interest.
3 Appellants Williamson and Doty also have standing because they have
4 special expertise as private attorneys general to address dangers and wrongs in the
S complicated areas of climate change and utility ratemaking and service that have
6 eluded the average citizen and even regulators tasked with addressing those issues.
7 Therefore, the District Court should have ruled that.appellant’s had standing
8 and ordered an immediate temporary rate reduction pursuant to MCA § 69-3-304,
9 subject to PSC review on remanded, mandaniused the PSC to establish unmetered
10 rates for LEDs, and required NorthWestern to grant access to its poles to anyone
11 substituting LEDs for the inefficient HPS fixtures.
12 ARGUMENT ON ISSUE 41314 When ruling that Petitioners lacked standing, did the PSC commit an15 error of law by failing to consider whether or not Petitioners were16 persons directly affected by MCA § 69-3-321 subparagraphs (b) & (c),17 or err by not interpreting those latter subparagraphs correctly?18 Answer: Yes. When one considers the entire statute, the19 Appellant’s have standing to be seek justice before the PSC.2021 The Commission found in ¶59 of Order 7084a:2223 59. The Commission concludes that Complainants are not24 members of street and area lighting class ofNWE and Complainants25 have not shown that they are “directly affected” by NWE’s Tariff26 Schedule ELDS-l as is required by § 69-3-32 1, MCA.5427
54Doc Seq. 1.000, ¶ 32.29
1 That statute provides:23 MCA § 69-3-321. Complaints against public utility-- hearing. (1) j~4 commission shall yroceed, -. to make such investigation as it may deem5 necessary upon a complaint made against any public utility by ...
6 pe~pp, ... provided such person, ... is directly affected thereby, that:7 (g) any of the rates, tolls, charges, or schedules or any joint rate or8 rates are in any way unreasonable or unjustly discriminatory;9 (j.~) ~py regulations, measurements, prnptices, or acts whatsoever
10 affecting or relating to the production, transmission, delivery, or11 furnishing of heat light, ... or any service in connection therewith.12 is in any respect unreasonable, insufficient or unjustly13 discriminatory; or14 fcl any service is inadequate. [Emphasis added.]1516 The PSC’s attorney and consequently the Commission were fixated on
17 subparagraph (a) and the notion that because local governments pay the fee for
18 street lighting, they are the only entities that are directly affected by
19 NorthWestern’s rates. In explaining the statute to the Commission, Commission
20 Counsel did not discuss or explain other major relevant portions of the statute,
21 namely subparagraphs (b) and (d).55 As a result, in coming to its conclusion, the
22 Commission did.not appear to consider the contention ofWilliamsonetaL that
23 they also have standing because they are directly affected by other actions
24 mentioned in subparagraphs (b) and (c) of § 69-3-321.
25 One does not have to be in the street lighting class ofcustonier&per se to be
26 directly affected by the rates assessed for street lighting, by the inadequate service
~ A, p.4, or at 11:55 minutes into the audio file.
30
I provided because the current lIPS lights use twice as much energy as the newer
2 lights; because the HPS lights have much worse color rendering; because the light
3 on the pavement provided by lIPS is more uneven than the light provided by
4 LEDs; or because drivers can distinguish objects more than twice as far away on
5 roads lit by 165-watt LEDs than on roads lit with traditional 250-waif HPS
6 fixtures.
7 The Grubas, for example, do not have to be in the street lighting customer
8 class to be directly affected by the HPS light in their alley that shines all night into
9 their bedroom window. That lIPS alley light is not on a motion sensor or dimmer
10 because HPS technology does not allow it. LED technology allows motion sensing
11 or dimming so that LEDs shine only when they are needed. That is a definite.
12 improvement making service more adequate in areas where there is little foot or
13 auto traffic and thus no need for continuous 56 Standing is allowed (under
14 subsection (c)) if such service is inadequate as illustrated by these examples.
15 In addition (under subsection (bD, if the “practice . ..relatingto the . -.
16 delivery .... of . -. light, or any service in connection therewith is in any respect”
17 unreasonable or insufficient standing is allowed. This includes the “service” a city
18 performs in paying the bill for the light before theinflated fee is reallocated and
19 assessed to Grubas and their neighbors.
56 Doc Seq. 6.100, Item 16, ¶s 12 -16.
31
1 So, since it would be incongruous to claim that an unneeded light shining in
2 a bedroom window night after night does not directly affect the (Irubas, they are
3 indeed directly affected. The fact that there is a window between the bedroom and
4 the light is immaterial. It is likewise inappropriate to contend that a billing window
5 involving a local government destroys the direct effect of the unjust rate ultimately
6 assessed for street lighting.
7 Conclusions on Issue 4: Reviewing statutory construction tie novo pursuant
S to the Redies, Kovatch, and Smith v. Board ofHorse Racingcases cited above, this
9 Court will see that it is clear that the PSC’s interpretation is incomplete. That
4 10 interpretation ignores the plain wording of subparagraphs (b) and (a) of § 69-3-
11 321. Such omission is dear error.
12 ARGUMENT ON ISSUE 5:1 13
14 Do any of the Petitioners have standing under any theory to bring a15 class action seeking a remedy before the Public Service Commission16 that they are being overcharged for inferior street lighting service by17 NorthWestern Energy?18 Answer: Yes. The billing events intervening between initial19 application of NorthWestern’s fee and its ultimate payment by SIIJMZI)20 members and taxpayers do nothing to add to the initial harm, namely21 the overcharge. Petitioners are directly affected by a joint rate22 incorporated in a contract of which they are third-party beneficiaries.23 And Montana’s Constitution requires a remedy for the wrongs alleged24 that precludes the PSC’s ruling that standing to seek redress is not25 available.26
32
I Appellants have standing because there is no superseding cause
2 intervening to blunting the effect of the first harm caused by NorthWestern’s
3 unreasonable profiteering.
4 Commission Counsel’s analysis of the statute focuses on what customer
5 class the Original Complainants are in. The original order even used the word
6 “customers.” That order wording was changed to the statutory wording of
7 “persons” when Williamson et at sought the correction on motioh for
8 reconsideration. However, the PSC’s overall analysis did not change
9 correspondingly.
10 What does the word “directly” mean? For our view please see Williamson et
11 a!. counsel’s oral argument in the District Court. It analyzes a 2006 Montana
12 Supreme Court’s ruling. That discussion is reproduced in part here:
13 ... the Montana Supreme Court has recently interpreted the word14 “direct” .... There the concept ofproximate cause is often equated with the15 concept of single or direct cause and direct loss. That was the result of the16 2006 Montana Supreme Court case ofFrontline Processing Corp. v.17 American Economy Insurance, [2006 Mont. LEXIS 684; 2006 MT 344; 33518 Mont. 192;149 P.3d 906]....19 In Frontline, with Justices Nelson, Morris, Warner and Rice20 concurring, Justice Cotter adopted the proximate cause standard in21 determining what direct losses would be covered by an insurance contract.22 The insurance company was saying that there were certain losses that23 weren’t direct and therefore they didn’t have to pay for them. The prevailing24 side in Frontline contended that the concept ofdirect lost ordinarily has been25 deemed synonymous with the concept ofproximate cause [in]... casualty26 insurance coverage27 For example, in ... Fred Meyer, Incorp. v. Mutual Insurance Co., 23528 F. Supp. 540 [(0. Or. 1964)]..., they found that food spoilage caused by
33
1 failure of refrigeration when a windstorm destroyed electric power lines is a2 direct loss by a windstorm.34 I’d like to refer the Court to — in terms of... deciding when the word5 “direct’t should apply -- to Montana Jury Instruction 2.09 on chain of6 causation. It reads, “The defendant is liable if his or her negligence was the7 cause ofplaintiffs damage. The defendant’s conduct is a cause of the8 damage if, in a natural and continuous sequence, it helped produce it and if9 the damage would not have occurred without it” This is a sequence case
10 There is another jury instruction, 2.10, which reads, “More than one11 person may be liable for causing an injury.” That’s the case here. “The12 defendant may not avoid liability by claiming that some other person helped13 cause the injury.”14 Similar analysis has evolved in the state of Minnesota which, while15 not dispositive here, can shed useful light on what is often meant by the16 word “direct”.17 Jury Instruction 140 in Minnesota says, “A direct cause is a cause18 which has had a substantial part in bringing about the occurrence either19 immediately or through happenings which follow one on another.” What we20 have here is happenings which follow one on another. The utility21 overcharging people in lighting districts and being passed through to the22 light bill, and under the theories ofproximate cause and direct cause ... they23 would ... be considered a concurring cause, or they would not be considered24 to be “not a direct cause,” because they follow [on] ... immediately.2526 In order for there not to have been a direct effect here, we need27 something that acts as an independent source to produce the injury...... [A]28 superseding cause would have to break the chain of causation set in29 operation by the original act andinsulate the original actor from liability. We30 don’t have that.31 So under the analysis in the Frontline case, which adopted the32 proximate cause standard in determining what direct losses would be33 covered by an insurance contract, the causal ... [chain] for harm has not34 been broken and petitioners have standing to have their harm addressed by35 the Public Service Commission.57 [Bracketed material added for36 clarification]37
“Supreme Court File {flled 8/17/11 }, Partial Transcript of [January 11,2011j Proceedings before Judge Susan Waters, p.5,1. l6throughp. 10,1.17.
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1 Standing to protect constitutional rights. MCA § 69-3-321 cannot be
2 interpreted to trump the rights found in Montana’s Constitution.
3 Any of the paragraphs in § 69-3-32 1 would afford appellants standing to
4 petition the PSC for a speedy remedy guaranteed by the Montana Constitution,
S Article II, § 16). 58
6 Artic1ell,~ 16requires:
7 Section 16. The administration of justice. Courts. of justice shall be open8 to every person,, and speedy remedy afforded for every injury of person,9 property, or character... . Right and justice shalL be administered without
10 sale, denial, or delay. [Emphasis added.]1112 Despite the fact that this Montana Constitutional provision was prominently
13 pled in the Appeal to the District Court, ~ and raised before the PSC6° the
14 provision was not analyzed, distinguished or even mentioned in either dismissai
15 issuebytheCourt.
16 There is a definite injury to property here. Property of appellants and those
17 in their class are being commandeered unjustly to the tune of$61,000 a month in
18 Billings--triple that in NorthWestern’s system. That’s justice denied and delayed.
19 Those are facts (stated in greater detail in Statement ofFacts, above ¶~f 11 — 15 &
58Doc. Seq. 6.100; Item 2,~sE, 6,8, 10& 88; Doc. Seq. 6.100; Item 16, ¶s3, 5, 7 7a(9), 7a(16), 7a (19), 7a(S0), 7a(5 1), 7a(53), 7a(55), 7b(8), Th(12), 7b(39),7b(40), 7b(42), 7b(44) & 88; Doe. Seq. 1.000, ¶ 52.
“Doe. Seq. 1.000, ¶ 44.60Doc. Seq. 6.100; Item 17, p.4, § 4.
35
I 17—22) that must be taken as true for the purposes ofadjudicating this standing
2 motion.
3 Further, denial of standing will strip Williamson et a!. and persons in theft
4 classes of their Article II, § 3, Montana Constitutional right to a clean and healthful
5 environment and their right under Article II, § 34 to protect their property from
6 unlawful utility rate gouging sanctioned by an inattentive regulatory body that used
7 to be chaired during part of the profiteering involved by the very person who now
8 sits at the head of the offending utility.6’
9 Standing under the legal equivalent of all standing provisions doctrine.
10 As Montana citizens, we all are directly affected by the excess C02 created by
11 unnecessary burning of fossil fuel partially brought about by continued use of
12 inefficient street lights. Those effects are pled facts as outlined in Statement of
13 Facts ¶ 23). Those pled facts are supported by years of research and by the
14 overwhelming majority of the world’s scientific community; pled facts that must
15 be taken as true for purposes of the Motion to Dismiss.
16 For example, as the climate warms and the range of disease-bearing insects’
17 increases, ow world can expect 80 million new cases ofmalaria a year. Unless
18 Montana’s climate becomes too hot and dry, it is only a matter of time before that
19 direct effect of increased malaria will be confronting Montanans and ow health-
61 Doc. Seq. 6.100, Item 8 in Administrative Record, p. 25.
36
1 care providers. And if our climate becomes too hot and city we face another
2 problem, namely decreased harvest yield and water supply. Montana’s
3 Constitutionalright to a healthfUl environment gives us the right to confront those
4 eventualities at the PSC prior to when thçy become afait accompli.
5 Indeed, confronting this matter of energy waste adding to global climate
6 change is of such overriding public moment as to provide a basis for standing
7 because it meets the legal equivalent ofall the standing tests. Lee v. State, 195
8 Mont. 1,6,635 P.2d 1282, 1284-85 (1981) (citing Matter ofSecret Grand Jury
9 Inquiry, 170 Mont. 354, 357, 553 P.2d 987, 990 (1976)).That is, our best scientists
10 tell us our Constitutional right to a clean and healthful environment is being
11 undermined by unnecessary energy waste. Ifwe cannot confront the unreasonable
12 utility service standards perpetuating that before the PSC, where then is this
13 impendingcalamity to be confronted?62
14 Standing because two Appellants have special expertise. Dr. Williamson,
15 and Mr. Doty have special expertise to chailengestate regulation that allows utility
16 overcharges to fUnd excess use of fossil fuel when viable, cost-effective, more
17 energy efficient alternatives are available. Thus they have standing to pmtect the
18 rights of others in the general rate paying public who do not have the scientific or
19 ratemaking expertise to bring action on their own behalf. Singleton v WuIff, 428
62Doc. Seq. 6.100, Item 8, pp. 23-4.
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1 U.s. 106,96 S.Ct. 2868,49 L.Ed.2d 826 (1976).63
2 Standing because Appellants are directly affect by a joint rate. At the
3 oral argument in District Court, counsel for Williamson et at contended:
4 . -. a close reading of the first paragraph of the statute Mr. Paine relies5 on requires that persons may be directly affected not only by rates, but by6 any joint rate.6478 Once the rate imposed by NorthWestern passes through to the tax statement,
9 it becomes a “joint rate.” That is, the fee which appears as a line item on the
10 property tax statement of persons like Grubas and Barsantis who live in SILMDs is
11 ajoint rate—one imposed by both the city and NorthWestern. Likewise, a non-line
12 item rate that appears on the property tax bill of the other Williamson et at
13 appellants to. defray the general pro rata share of the local government’s cost of
14 street lighting service to its citizens is a “joint rate.”
15 Creation of a statutory partnership in which the city pays the bills for the
16 street lights and thus performs the unreimbursed billing service for the utility does
17 not limit the right of a person affected by the bill to seek relief if the bill paid was
18 for an overcharge.
19 Standing as third party beneficiaries. Williamson et at. also claim
20 standing as third party beneficiaries ofvarious contracts their local governments
63Doc. Seq. 6.100, Item 8, pp. 25.64 Supreme Court File {ffled 8/17/il), Partial Transcript of {January 11,
2011] Proceedings before Judge Susan Watters, p. 5,11. 8-11.
38
1 have enter with NorthWestern.65 In some SILMDs the overcharge has gone on for
2 more than 16 years. The local governments have known of the overcharge. Yet
3 they have done nothing to avert it.
4 Generally, if a person is a beneficiary under a trust and the trustee will not•
5 enforce his rights, the beneficiary has a right to proceed and sue both the trustee
6 and the entity violating the beneficiary’s rights. See MCA § 72-34-502.
7 That principle should apply here where we have the city making the so-
8 called direct payment on behalfof the taxpayer. But rather than force the ultimate
9 ratepayer to sue the “trustee” local governments involved, the better course is to
10 make only the entity violating the beneficiary’s rights the defendant, i.e., the
11 utility.
12 Because they are third party beneficiaries ofmany street lighting contracts
13 NorthWestern has with cities, petitioners are real parties in interest and are
14 properly named as parties under Montana Rules of Civil Procedure, M.R.Civ.P.
15 Rule 17(a) and MCA § 2-4-102 (8) & (9).
16 Conclusions on Issue 5: This Court refrains from interpreting a statute in a
17 manner that would defeat its purpose. Hawley v. Board ofOil and Gas
18 Conservation, 2000 MT 2, ¶ 12,297 Mont. 467, ¶ 12, 993 P.2d 677, ¶ 12 (citation
19 omitted); Juro ‘s, ¶21. The purpose ofMCA § 69-3-321 is to provide justice to
65Doc. Seq. 6.100; Item 2, ¶ 0; Doc. Seq. 6.100; Item 16, ¶s 7a(18), 7a(19)& 7b(1 1)& 7b(12); Doc. Seq. 1.000, ¶ 53.
39
1 those adversely affected by actions ofmonopoly utilities. For the reasons stated at
2 page 28 in the “Summary ofArguments on Issues 4 and 5” section above, the PSC
3 and District Court should have granted standing and the other remedies sought by
4 Williamson et aL
5 CONCLUSION67 Please see the Summary ofArgument sections at pages 14 and 28 for
8 conclusions. hi addition, this case should be remanded to the PSC with instructions
9 to proceed with the temporary rate decrease request, LED installation, and with the
10 unmetered tariff, and pole usages requests or face a show cause hearing on a
11 mandamus in the District Court as to why they are not proceeding.
12 Respectfully Submitted.
14 ~. September 28, 201115 Russell L. Doty, Attorney for Appellants Williamson, et aL16 3878NTanagerLn17 Billings, MT 59102-591618 (406)696-284219 (406) 656-2763-Fax20
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I23
CERTIFICATE OF SERVICE
4 1 hereby certi& that I caused a true and accurate copy of the foregoing
5 Appellant’s Opening Briefand Appendix to be mailed, first class mail, postage
6 prepaid to the attorney for the Public Service Commission and to NorthWestern
7 Energy addressed to:
James C. Paine, Assistant Attorney Monica 3. Tranel, Esq.General Attorney for NorthWesternAttorney for EnergyThe Montana Public Service Tranel, McCarter & Morris,Commission PLLP1701 Prospect Avenue Great Northern Town CenterP0 Box 202601 30 West 14th Street, Suite 204Helena, MT 59620-2601 Helena, MT 59601
89
101112
DATED: September~~ 2011 By: ~ 2
Russell L. Doty
41
1 CERTIFICATE OF COMPLIANCE23 Pursuant to. Rule 27 of the Montana Rules ofAppellate Procedure, I certify
4 that this brief is printed with a proportionately spaced Times New Roman text
5 typeface of 14 points; is double spaced, and the word count calculated by MSWord
6 for Windows is not more than 10,000 words (approximately 9951 words including
7 footnotes), not averaging more than 280 words per page, excluding table of
8 contents, table of citations, certificate of service, certificate of compliance, or any
9 appendix containing statutes, mies, regulations, and other pertinent matters.
10
11 DATED: Septemberj~ 2011 Byf~ ~ rc422’~
12 . Russell L. Doty
42
