An Indiana appellate court recently affirmed a trial court’s decision to dismiss a plaintiff’s complaint for damages, attorney’s fees and an injunction for lack of jurisdiction and the plaintiff’s failure to exhaust administrative remedies prior to filing suit.
In Bridges v. Veolia Water Indianapolis, LLC, 978 N.E.2d 447 (Ind. Ct. App. 2012), Veolia turned off Bridges’ water for nonpayment. Bridges then attempted to file a class action lawsuit for breach of contract, seeking a return of her $25 reconnection fee, other unspecified damages, attorney’s fees, and an injunction. Veolia is an independent contractor that managed and operated water treatment and distribution facilities owned by the Department of Waterworks. It moved to dismiss Bridges’ complaint and argued that the trial court lacked subject matter jurisdiction over the matter because she failed to exhaust the administrative remedies available to her at the Indiana Utility Regulatory Commission (“IURC”). The trial court agreed with Veolia and dismissed the complaint for those reasons. Bridges then appealed.
The Court of Appeals affirmed the trial court’s decision. In so doing, it first looked at the tariff that governed the services Veolia provided to residential customers. The tariff was approved by the IURC and provided that a residential customer would be subject to a $25 re-connect fee after having their water service involuntarily disconnected for nonpayment, in addition to setting forth the administrative process to be utilized by aggrieved customers. Bridges’ complaint alleged that Veolia committed a breach of contract by violating the terms of the tariff by turning off her residential water service without following the proper procedures on two separate occasions.
The Court noted that the Indiana General Assembly created the IURC primarily as a fact-finding body with the technical expertise to administer the regulatory scheme devised by the legislature. It emphasized that where the legislature has provided an exclusive administrative remedy, the courts are without jurisdiction until the statutory procedure has been exhausted or denied. The Court then focused on the rationale for conditioning access to a court on the exhaustion of any explicit administrative remedy: administrative bodies have specialized expertise, and are better suited to settle disputes between customers and regulated entities. Premature litigation may also be avoided if the agencies retain the opportunity to correct their own errors.
The Court then looked to precedent cases and conducted statutory interpretation to conclude that Bridges’ claim fell within type of claim covered by the IURC’s exclusive jurisdiction. Nevertheless, Bridges argued that her failure to exhaust her administrative remedies should be excused because exhaustion would have been futile. Exhaustion of administrative remedies may sometimes be excused if the exercise would be futile. To prevail upon a claim of futility, it must be shown that the administrative agency was powerless to effect a remedy or that it would have been fruitless and of no value under the circumstances. Here, since the IURC had authority to order entities like Veolia to refund damages suffered by aggrieved customers, and the IURC had actually ordered those entities to do so in the past, the Court concluded it would not have been futile for Bridges to exhaust her administrative remedies available to her.
Jeremy Fetty is a partner in the law firm of Parr Richey Obremskey Frandsen & Patterson with offices in Lebanon and Indianapolis. He often advises businesses and utilities (for profit, non-profit and cooperative) on organizational, human resources, and transactional matters and drafts and reviews commercial contracts.
The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.