A-RIGHT PLUMBING, SEWER AND WATER MAIN COMPANY, LLC v. AQUARION OPERATING SERVICES CO. ET AL.

2006 Ct. Sup. 7179
No. X06-CV05-40004864 SConnecticut Superior Court Judicial District of Waterbury Complex Litigation Docket at Waterbury
April 18, 2006

[EDITOR’S NOTE: This case is unpublished as indicated by the issuing court.]

MEMORANDUM OF DECISION
JON M. ALANDER, JUDGE.

The defendants Aquarion Operating Services Company and Aquarion Water Company of Connecticut (Aquarion defendants) and the defendant South Central Connecticut Regional Water Authority (RWA) have moved for summary judgment on all three counts of the plaintiff’s complaint which assert claims of violations of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq., on the grounds that the acts and practices complained of do not, as a matter of law, constitute unfair or deceptive acts or practices. For the foregoing reasons, I agree.[1]

The plaintiff A-Right Plumbing, Sewer, and Water Main Company, LLC (A-Right Plumbing) repairs sewer lines and water lines as part of its plumbing services. The Aquarion Water Company of Connecticut and RWA are public service water companies which provide water to homes in various cities and towns in Connecticut and are regulated by the Department of Public Utility Control (DPUC). The Aquarion Water Company of Connecticut is a company affiliated with Aquarion Water Company of Connecticut which provides operations, maintenance and engineering consulting services. The Aquarion defendants and RWA operate repair programs[2] through which consumers can purchase in advance a plan for the repair or replacement of water or sewer pipes for a fixed annual fee. For example, under the Safety Valve plan operated by the Aquarion defendants, a homeowner pays an annual fee of $68 in return for the future repair or replacement, at no additional cost, of certain water pipes owned by the subscriber in the event of a leak. By paying a fixed annul fee of $59.92, a homeowner subscribing to the PipeSafe program offered by RWA purchases a service plan which provides up to $5,000 in water line repairs and property restoration costs. Both the Aquarion CT Page 7180 defendants and RWA offer similar repair plans for the repair of sewer lines. The provision to homeowners of repair services to water and sewer lines is not regulated by the DPUC.

A-Right Plumbing claims that the Aquarion defendants and RWA have used their “state-sanctioned monopoly” as the exclusive provider of water and sewer services within their geographic regions to obtain an unfair advantage over the plaintiff in the provision of water and sewer line repair services.[3] The plaintiff contends that the defendants possess an unfair marketing advantage because they can insert pamphlets advertising their repair programs in monthly water bills and use their telephone answering services to advertise and solicit business for their repair programs. The plaintiff asserts that the advantage gained by the defendants through their monopoly status constitutes an unfair method of competition in the conduct of trade or commerce in violation of General Statutes § 42-110b. I am not persuaded.

CUTPA provides that “no person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” General Statutes § 42-110b(a). CUTPA was designed to provide protection to businesses as well as to consumers and a competitor or other business person can maintain a CUTPA cause of action without showing consumer injury Eder Brothers v. Wine Merchants of CT, 275 Conn. 363, 379-80
(2005). The test for ascertaining whether a practice is unfair in violation of CUTPA is well established. “It is well settled that in determining whether a practice violates CUTPA we have adopted the criteria set out in the `cigarette rule’ by the federal trade commission for determining when a practice is unfair: (1)Whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise — in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers, competitors or other businessperson. All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.” (Citations and internal quotation marks omitted.)Hartford Electric Supply Co. v. Allen-Bradley Co., 250 Conn. 334, 367-68 (1999). CT Page 7181

With respect to the first prong of the cigarette rule, the plaintiff has identified no public policy, expressed by statute or otherwise, which is offended by the defendants’ provision of their repair programs. Notwithstanding the plaintiff’s allegations that the defendants have unfairly used their monopoly status as public service water companies to market their repair programs, the public policy underlying antitrust laws is not implicated by the defendants’ programs because the plaintiff has not proffered any evidence that such programs have had an anticompetitive effect. “A private plaintiff seeking to state a claim for violation of sections 1 or 2 of the Sherman Act must allege that it has suffered `antitrust injury.’ The antitrust injury requirement obligates a plaintiff to demonstrate, as a threshold matter, that the challenged action has had an actual adverse effect on competition as a whole in the relevant market; to prove it has been harmed as an individual competitor will not suffice. The antitrust laws . . . were enacted for the protection of competition, not competitors.” (Internal quotation marks and citations omitted.) George Haug Co. v. Rolls Royce Motor Cars, Inc., 148 F.3d 136, 139 (2d Cir. 1998). See also Journal Publishing Co. v. Hartford Courant Co., 261 Conn. 673, 695
(2002). (The violation of Connecticut’s antitrust statutes requires evidence of actual anticompetitive effects.) As i Journal Publishing Co. v. Hartford Courant Co., supra, 261 Conn. 694, “the plaintiff produced no evidence supporting the existence of any actual anticompetitive effects, such as reduction of output, increase in price, or deterioration in quality of goods and services.”

The second criterion of the cigarette rule requires little discussion as the plaintiff has not offered any evidence that the plaintiffs’ acts or practices were “immoral, unethical, oppressive, or unscrupulous.” The plaintiff decries the defendants’ ability to use their monopolistic power, but he does not complain that it was exercised in an immoral or unscrupulous manner.

The third and final criterion under the cigarette rule is whether the alleged acts or practices cause substantial injury to consumers, competitors or other business persons. To justify a finding of unfairness under this criterion, the injury must satisfy three tests: it must be substantial; it must not be outweighed by any countervailing benefits to consumers or competition that the practice produces; and it must be an injury CT Page 7182 that consumers or competitors themselves could not reasonably have avoided. McLaughlin Ford, Inc. v. Ford Motor Co., 192 Conn. 558, 569-70 (1984). The plaintiff has failed to offer evidence that satisfies this three-part test. That failure is fatal as any injury to the plaintiff is greatly outweighed by the countervailing benefits to consumers produced by the defendants’ repair plans. The injury to the plaintiff is the loss of business repairing leaking or ruptured water and sewer lines resulting from increased competition by public service water companies and their affiliates; an injury traditionally considered “insignificant.” Id., 570-71. In contrast, the benefits to consumers from the entry of the defendants into the business of water and sewer line repair are substantial as it provides homeowners with increased choice and potentially lower costs. Under the defendants’ repair programs, homeowners receive for a low fixed annual fee the guarantee that water line and sewer repairs worth thousands of dollars will be repaired without further cost.[4] A risk-averse homeowner can choose what is essentially an insurance plan from the defendants while a risk-tolerant homeowner can decide to pay no charges now and chance a future leak or rupture with its attendant significant repair costs later. The existence of various plans at varying prices vying for customers is the essence of competition. And competition without more does not constitute a violation of CUTPA. McLaughlin Ford, Inc. v. Ford Motor Co., supra, 192 Conn. 571.

In light of the above, the defendants’ motions for summary judgment are hereby granted.

[1] The defendants also assert that they are entitled to summary judgment because (1) they are exempt from liability under CUTPA; and (2) the plaintiff cannot establish that any ascertainable loss it may have suffered was caused by the defendants. In light of my determination that the defendants’ acts and practices do not constitute unfair or deceptive acts or practices under CUTPA, it is not necessary that I address these claims.
[2] The Aquarion defendants operate a program known as The Safety Valve program for the repair of water pipes and a program known as The Safety Valve Plus program for the repair of sewer pipes. RWA operates repair programs known as PipeSafe and PipeSafe Plus for the repair, respectively, of water pipes and sewer pipes.

CT Page 7183

[3] The plaintiff has made no claim that the acts or practices of the defendants were deceptive.
[4] George Lamb, the sole owner of A-Right Plumbing, testified at his deposition that he charges from $2,500 to $6,000 to repair sewer and water lines.

CT Page 7184