Eighth Circuit Affirms Dismissal of Consumer Fraud Action Based on the Filed Rate Doctrine
Yesterday the Eighth Circuit affirmed a decision dismissing a consumer fraud class action against a cable television provider. See Crumley v. Time Warner Cable, Inc., 2009 WL 454723 (8th Cir. Feb. 25, 2009). Plaintiff alleged that the defendant violated Minnesota's Consumer Fraud Act by effectively charging for the same system upgrades twice. The defendant's first recovery for the upgrades allegedly occurred when it persuaded the Federal Communications Commission to approve a five-year surcharge to pay for systems upgrades the defendant was going to perform. The defendant's second recovery came when it filed an FCC "Form 1235" with the City of Minneapolis in 2001 to incorporate a "network upgrade fee" into its basic cable rate. Plaintiff sought both damages and recovery for the defendant's alleged unjust enrichment.
The district court had granted the defendant's motion to dismiss, and the Eighth Circuit affirmed, citing the "filed rate doctrine," which "forbids a regulated entity from charging a rate for its services other than the rate on file with the appropriate regulatory authority." Id. at *2 (citation omitted). Here, the City of Minneapolis was the appropriate regulator, and the "network upgrade fee" had gone through the appropriate approval process. Accordingly, plaintiff could not bring a state law claim that would effectively require the defendant to charge a different rate, even though the allegation was that the rate had been approved based on a fraud:
[Plaintiff's] attempts to characterize her complaint as one challenging Time Warner's actions as fraudulent do not change the fact that what she challenges is the rate on file with the City of Minneapolis. If Crumley's suit was successful, . . . Time Warner would not be allowed to charge the allegedly unlawful upgrade fee . . . This is directly contrary to the filed rate doctrine, which "'prohibits a party from recovering damages measured by comparing the filed rate and the rate that might have been approved absent the conduct in issue.'" That Crumley's claim involves allegations of fraud is of no moment. . . . This case is directly governed by the filed rate doctrine because, if allowed to proceed, "the court's decision will [impact] . . . agency . . . rate determinations."
Id. at *2 (citations omitted).
