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Recently, class action attorneys have turned increasingly to the doctrine of “primary jurisdiction” as an alternative to class litigation in the law courts. This relatively obscure doctrine marks an interesting intersection between administrative and judicial relief. Moreover, state courts seem to have more highly developed jurisprudence on the doctrine of primary jurisdiction than federal courts, with numerous state decisions discussing and applying the doctrine. Defense attorneys raise the primary jurisdiction doctrine on a motion to dismiss a class action, a motion to dismiss for failure to state a claim or as a challenge to the “superiority” requirement for class certification. SeeCharles A. Wright, Arthur R. Miller and Mary K. Kane, Federal Practice and Procedure: Civil 2D � 1779. Defense attorneys invoke the doctrine, arguing that an administrative agency or regulatory body has superior jurisdiction and competency to resolve the complaints of aggrieved citizens. LOOKING AT THE DOCTRINE OF PRIMARY JURISDICTION Defense lawyers invoke the primary jurisdiction doctrine before class certification in order to have contested issues sent to an appropriate agency, rather than a court proceeding, for administrative determination. The primary jurisdiction doctrine frequently is raised in state class actions involving claims relating to insurance, utilities, rate-making, oil and gas, and other heavily regulated industries. Under the primary jurisdiction doctrine, a litigant files a lawsuit in court but the court makes the determination that the disputed issues require administrative expertise to resolve the questions. Thus, one purpose of primary jurisdiction is to allow an agency to apply its expertise to questions that require the interpretation of agency rules, or to preserve uniformity in the interpretation and application of agency regulations. Hence, a court defers exercising its own jurisdiction and refers the matter to an administrative agency in order for the agency to decide some material issues that the legislature has placed under the agency’s jurisdiction and special competence, under a regulatory scheme. Many courts have noted that primary jurisdiction is doctrinally related to the exhaustion-of-administrative-remedies principle. In contrast to the doctrine of primary jurisdiction, if a litigant invokes the exhaustion-of-administrative- remedies doctrine, a court may conclude that the case ought to have been brought before an administrative agency in the first place. Generally, a court determines whether primary jurisdiction exists in an administrative body. The doctrine assumes that a case has been first brought in court, and the doctrine has no application when a litigant files an original proceeding in an administrative agency, asking that agency to declare that it possesses primary jurisdiction. See Central Power and Light Co. v. Public Utility Commission of Texas, 17 S.W. 3d 780 (Tex. App., Travis Co. May 4, 2000). A New Jersey appellate court, however, has held that the state Board of Public Utilities could decline to exercise primary jurisdiction over a group of plaintiffs’ claims, which finding was entitled to deference by a law division court. Muise v. GPU Inc., 332 N.J. Super. 10, 753 A.2d 116 (Super Ct. N.J. June 14, 2000). The doctrine of primary jurisdiction “is concerned with promoting proper relationships between the courts and administrative agencies charged with particular regulatory duties.” Kiefer v. Paging Network Inc., 50 F. Supp. 2d 681, 683 (E.D. Mich. 1999), quoting Nader v. Allegheny Airlines Inc., 426 U.S. 290 (1976). The court will consider “whether the reasons for the existence of the doctrine are present and whether the purposes it serves will be aided by its application to the particular litigation.” Kiefer, id.; citing U.S. v. Western Pacific Railroad Co., 352 U.S. 59 (1956). Federal and state courts evaluate the doctrine of primary jurisdiction under similar standards. The test for primary jurisdiction considers: (1) whether the matter is within the conventional experience of judges; (2) whether the matter is peculiarly within the agency’s discretion or requires agency expertise; (3) whether inconsistent rulings might pose a danger of disrupting a statutory scheme; and (4) whether prior application has been made to the agency. See Muise, supra; Boldt v. Correspondence Management Inc., 320 N.J. Super 74, 726 A.2d 975 (App. Div. 1999), quoting IPCO Safety Corp. v. WorldCom Inc., 944 F. Supp. 352 (D.N.J. 1996). MIXED RESULTS AS A DEFENSE TO CLASS LITIGATION Attorneys have raised the doctrine of primary jurisdiction as a defense to class litigation, with mixed results. For example, defense attorneys raised the primary jurisdiction argument in response to class action litigation challenging an electronic service provider’s allegedly unreasonable late-payment fee. Attorneys have successfully raised the doctrine of primary jurisdiction in federal court, but not in some state courts. In federal litigation, defense attorneys moved to dismiss a class complaint without prejudice under the doctrine of primary jurisdiction, and to refer the fee’s reasonableness to the Federal Communications Commission (FCC), the administrative agency Congress created to make determinations of whether such charges are reasonable under � 201(b) of the Communications Act, 47 U.S.C. 201(b). See Kiefer, supra, 50 F. Supp. at 681-82. A federal district court in Michigan held that the doctrine of primary jurisdiction applied and that it was appropriate to refer the matter to the FCC because the commission had specialized knowledge and experience of the telecommunications systems involved, and that referral to the FCC would promote uniformity and consistency in the FCC’s regulation of the telecommunications industry . Kiefer, id. at 683. Rather than dismiss the class action without prejudice, however, the court referred the plaintiffs’ claims to the FCC and stayed the court’s jurisdiction pending an FCC determination. In similar litigation, the 6th U.S. Circuit Court of Appeals held that the danger of inconsistent adjudications concerning the reasonableness of charges covered by � 201(b) was genuine because “numerous lawsuits have been brought by individuals and class action plaintiffs in different states and federal courts across the country.” Kiefer, supraat 685, quoting In re Long Distance Telecommunications Litigation, 831 F.2d 627, 630-31 (6th Cir. 1987). State courts, however, have not applied the primary jurisdiction doctrine in similar state class actions raising state-law claims challenging the reasonableness of such fees. Kiefer, id. (citing cases). AGENCY JURISDICTION NOT ALWAYS DEFERRED TO State courts are inclined to apply the doctrine of primary jurisdiction where statutory schemes clearly reserve certain questions to an administrative agency — most commonly, insurance practices. Seee.g., In re Insurance Stacking Litigation, 754 A.2d 702 (Pa. Super. Ct. June 8, 2000). Thus, in a Pennsylvania class action involving the alleged “stacking” of premiums, a Pennsylvania appellate court upheld a trial court’s determination to stay the litigation and transfer the matter to the Pennsylvania insurance commissioner to determine whether the premiums included a stacking charge. The court held that the state Legislature had specifically reserved questions of unfair insurance practices and automobile insurance rates to the insurance commissioner. Moreover, the litigation involved a challenge to the insurers’ practices and premiums rather than a pure question of statutory interpretation. Id., 754 A.2d at 707. State courts do not always defer to a state agency’s alleged primary jurisdiction. For example, a state court retained jurisdiction over a consumer class action against New Jersey utilities for negligent failure to provide service during a heat wave in July 1999. The complaint pleaded claims in negligence, breach of contract, breach of warranty, intentional misrepresentation, failure to warn, fraud and consumer fraud. Muise v. GPU Inc., 332 N.J. Super. 10, 753 A.2d 116 (Super Ct. N.J. June 14, 2000). The Board of Public Utilities conducted an investigation and issued a final report, determining that there was no reason to take further action and declining to exercise primary jurisdiction over the plaintiffs’ claims. The defendants moved to dismiss a law division class action based on the theory of primary jurisdiction of the board over the claims. The trial court denied the motion, and the appellate court upheld the denial. Primary jurisdiction cannot be invoked if a claim is outside an agency’s jurisdiction or if the remedy is outside the agency’s power. Even in cases in which primary jurisdiction applies, the doctrine does not confer exclusive jurisdiction on an agency, with the effect of limiting cognizable remedies to those within the agency’s authority. A court can consider all judicial remedies, including damages, which are beyond an agency’s authority, and a legislative intent to defeat such remedies will be inferred only if the legislature has “explicitly limited the availability of that remedy or relief.” Finally, the plaintiffs were entitled to a jury trial in their action at common law for money damages. Courts also have invoked and applied the doctrine of primary jurisdiction after settlement. Thus, a Minnesota appellate court recently upheld a trial court’s dismissal of a class action by Blue Cross subscribers to recover settlement proceeds Blue Cross had received from tobacco companies and trade associations for the increased costs of funding smoking-related illnesses. In re Blue Cross and Blue Shield, 1999 WL 203762 (Minn. App. 1999) (unpublished opinion). In their class action, the subscribers alleged claims for breach of special duty, unjust enrichment, restitution, constructive trust and accounting. The trial court dismissed the class action and concluded that any settlement proceeds Blue Cross had received were “subject to the primary jurisdiction of the Commerce Commissioner” under Minnesota statutes. Id. Under the state statutory scheme, the commissioner had the power to enforce state laws relating to insurance and was empowered to ascertain the nature of the settlement and the amount of proceeds received on behalf of subscribers . In re Blue Cross, id., 1999 WL 203762 * 2. The commissioner had the expertise to consider the big picture in calculating the proper amount of subscription charges and determining control over the disposition of the settlement proceeds. Furthermore, deference to the commissioner was appropriate because the trial court was being asked to determine how to divide the settlement proceeds, an issue that was then being raised in administrative proceedings before the commissioner. In re Blue Cross, id., 1999 WL 203762 * 3. PRIMARY JURISDICTION AND AGENCY CLASS ACTIONS In an interesting variation on the primary jurisdiction doctrine, an Arkansas appellate court held that not only did the Public Service Commission have primary jurisdiction to consider complaints of gas ratepayers, but that the commission had authority to hear class actions. Brandon v. Arkansas Public Service Commission, 67 Ark. App. 140, 992 S.W.2d 834 (Ark. App. 1999). Construing the Arkansas Act as conferring authority on the Arkansas Public Service Commission to hear consumer complaints relating to public utilities, the court concluded that the act “clearly demonstrates a legislative intent to place primary jurisdiction over consumer disputes in the Commission.” Id.,992 S.W.2d at 837. This primary jurisdiction included the authority to hear class action complaints. Addressing a question of first impression, the appellate court held, “Especially in proceedings before the Commission where the actions of a utility are likely to affect numerous ratepayers, it is only logical to conclude that the legislature intended to give the Commission the authority to hear class actions where it may be ‘necessary and expedient’ in the exercise of its power and jurisdiction or in the discharge of its duty.” Id., 992 S.W. 2d at 838. The court further suggested that the commission had the power to apply Arkansas Rule of Civil Procedure 23, governing class actions, in the exercise of its power to regulate public utilities. Id., 992 S.W. 2d at 840. Linda Mullenix is the Ward Centennial Professor at The University of Texas Law School. She is the author of the recently published “State Class Actions: Practice and Procedure.”

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