US Airways, Inc. v. Qwest Corp.
361 P.3d 942
Ariz. Ct. App.2015Background
- US Airways suffered a four-hour telecommunications service interruption after Skyline severed an underground cable while building adjacent carports; AT&T and EDS services to US Airways were interrupted.
- Qwest owned the buried cable; Qwest hired ELM to locate and mark it; ELM marked "no conflict" despite inaccurate Qwest maps and did not contact Qwest for further instructions.
- US Airways sued ELM, Qwest, and Skyline for negligence and sought nearly $2 million; Skyline settled.
- Qwest moved to dismiss arguing its FCC (and ACC) tariff limited negligence liability to the proportionate service charge; the superior court found the FCC tariff applied and capped damages at $586.40.
- ELM moved for summary judgment asserting it owed no duty to US Airways; the superior court granted ELM summary judgment.
- US Airways appealed both rulings; Qwest cross-appealed the finding that Qwest owed a duty to US Airways. The Court of Appeals affirmed both judgments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Qwest's tariff limiting liability applies to non-customers | Tariff doesn't bind non-customers like US Airways | Tariff language covers "customers or any others" and binds public generally | Tariff applies to non-customers when damages arise from interruption of telecommunications service; liability limited to proportionate service charge |
| Whether enforcing the tariff violates Arizona Constitution art. 18 § 6 (anti-abrogation) | Enforcing limitation unconstitutionally abrogates the right to recover full damages | Tariff limits damages but does not abolish the cause of action; willful/gross negligence still actionable | Limitation regulates recoverable damages and does not violate anti-abrogation clause |
| Whether public policy precludes enforcing tariff limitation | Public policy favors full recovery for injured parties | Public interest in regulated utilities supports limited liability to keep rates reasonable | Public policy does not preclude enforcement; limiting liability supports rate stability |
| Whether ELM owed a duty of care to US Airways (voluntary undertaking / third-party beneficiary) | ELM contracted with Qwest and voluntarily assumed Qwest's duty to locate/mark, creating duty to US Airways | ELM had no contractual or special relationship with US Airways and owed no duty to protect against purely economic loss | ELM owed no duty to US Airways; § 323/§ 324A principles do not impose duty for purely economic harm absent physical injury or reliance causing physical harm |
Key Cases Cited
- Colich & Sons v. Pac. Bell, 198 Cal. App. 3d 1225 (Cal. Ct. App. 1988) (tariff limitation binds the public generally, including non-customers).
- Primrose v. Western Union Tel. Co., 154 U.S. 1 (U.S. 1894) (historic limitation on telegraph company liability for transmission errors).
- Western Union Tel. Co. v. Esteve Bros. & Co., 256 U.S. 566 (U.S. 1921) (uniform rates impose uniform liability and make assent immaterial).
- Bulbman, Inc. v. Nevada Bell, 825 P.2d 588 (Nev. 1992) (upholding public utility tariff limitations on simple negligence claims).
- Olson v. Mountain States Tel. & Tel. Co., 119 Ariz. 321 (Ariz. Ct. App. 1978) (state precedent enforcing tariff limitation of liability).
- Sommer v. Mountain States Tel. & Tel. Co., 21 Ariz. App. 385 (Ariz. Ct. App. 1974) (tariff rules binding on customers and supporting limitation of liability).