US Airways, Inc. v. Qwest Corp. – 10/1/2015

October 8, 2015

Arizona Court of Appeals Division One holds that a telecommunications company’s federal and state tariffs limit liability to non-customers.

A contractor accidentally cut Qwest’s underground lines running to a US Airways data center, causing a four-hour service interruption and allegedly leading to nearly $2 million in damages to US Airways.  Although US Airways was not a Qwest customer, the airline’s telecommunications providers used the Qwest lines that were cut.

Before the contractor dug, it began the blue stake process in which utilities mark the location of their underground lines before construction occurs.  Qwest hired ELM Locating & Utility Services to mark Qwest’s lines, but it could not locate the lines because Qwest had inaccurate maps.  Rather than contacting Qwest once it realized the maps were inaccurate, ELM instead marked the site in a way that (incorrectly) indicated that Qwest’s lines were not in the construction area.  The contractor therefore had no notice that Qwest had buried lines there.

US Airways sued Qwest and ELM for negligence.  (US Airways also sued the contractor, which settled.)  Qwest’s federal and state tariffs limit the company’s liability to the service charge for the affected period, or about $600 in this case.  The superior court limited Qwest’s liability to that amount.  It also granted summary judgment in favor of ELM because ELM owed no duty to US Airways. 

US Airways appealed; the Court of Appeals affirmed.  As to Qwest, US Airways contended that the telecommunications company’s tariffs could not limit liability to non-customers.  The Court of Appeals disagreed, holding that the tariffs have the force and effect of law and are binding on both customers and non-customers. 

The Court of Appeals also affirmed as to ELM, holding that ELM owed no duty to the third party airline for economic harm. 

In addition, Qwest cross-appealed, arguing that it did not owe a duty to US Airways.  The Court of Appeals held that Arizona’s Blue Stake Law indicates that public policy favors a duty of care from utilities to the public, including non-customers.

Judge Portley authored the opinion; Judges Gemmill and Brown joined.