State public service commissioners got a dressing down from the Utah Supreme Court recently. The gist of the lesson -- that they are supposed to think about the public, not about the financial well-being of companies already serving a market -- is sure to be quoted around the country by executives seeking permission to enter new markets.
A trucker needs an okay from the Utah Public Service Commission to start intrastate hauls there. Four lines already had permission to carry petroleum road-paving products when Spreader Specialists made a bid to compete with them. The commission turned the firm down.
The four lines already in the market were serving it well, the decision explained, but they were showing only the slimmest of profits. That meant there was not much hope that new competition would drive the price down. And adding a newcomer to the tight market might be "the straw capable of breaking the camel's back," the commissioners found.
But the state high court majority said that was far too narrow a view. By a 3-2 vote, the justices in Spread Specialists v. PSC criticized the reasoning, saying the commission has no authority to "protect existing carriers from the effects of fair competition by denying the application of a fit and able carrier."
The June 23 ruling says worry about diverting revenue from those in the market to a newcomer isn't sufficient reason to shut the door.
In other cases, courts ruled that: A firm can use the trademark law to attack a competitor's advertising. That law lets a business sue to stop advertising containing "any false description or misrepresentation," but is usually used to stop promotions that might trick shoppers into thinking the product comes from another maker. But the U.S. Court of Appeals in Cincinnati decided the statute can be used against quality misrepresentations too, even if they do not create confusion about who made the item. The judges said the public would be well served if competitors, with a financial stake in the litigation, tried to stop deceptive advertising. They gave the go-ahead for the makers of Minute Maid orange juice to sue the makers of Citrus Hill over ads that implied Citrus Hill was made differently from other frozen orange juice.
(Coca-Cola v. Proctor & Gamble, July 2) A company may be immune from suits for on-the-job injuries suffered by a subcontractor's employes. Workers' compensation laws bar liability suits against a worker's own employer. But the U.S. Court of Appeals in Washington stretched that ban to overturn a $400,000 award given by a jury to a mechanic employed by Westinghouse, who hurt his wrist fixing light bulbs near the escalator at the Clarendon subway stop. Westinghouse maintains the escalators for the transit authority.
Subcontractors' employes may sue the company for which their employer works only if what they are doing is completely removed from the main business of the defendant, the opinion explains. Escalators, by letting customers get to and from underground trains, are a vital enough part of the business of running a mass transit system so that anyone working on them will be considered an employe of the system.
(Best v. WMATA, July 10) Home builders have the same obligation to investors who intend to rent out a property that they do to buyers who expect to live in the structure. Merely by selling a house, a builder is guaranteeing that it is fit to live in and is obligated to fix any defects that show up. But an Illinois appellate court in 1981 held that such warranties apply only to those who buy a family home; investors looking for rental income are expected to be able to fend for themselves. The Idaho Supreme Court has rejected that reasoning, saying a builder's duty should not hinge on the buyer's plans.
(Tusch Enterprises v. Coffin, July 2) Landlords can challenge the government's decision to finance new housing for the elderly. The property owners insisted that such new housing would siphon off low-income residents of their existing properties and cut into the rent subsidies available to those tenants. But the trial court threw out the case, saying that since the Housing Acts were not written for the benefit of landlords, they could not challenge such funding decisions. That's too narrow a reading of who can sue, the U.S. Court of Appeals in St. Louis ruled. Competitors of those affected by a regulation are closely enough affected to be able to challenge the regulation in court, the judges noted.
(DeLoss v. HUD, July 2)Moskowitz covers legal affairs for McGraw-Hill World News