CT Contractors Subdue Utilities

What do Connecticut PHC contractors, AOL hourly subscribers, and women with silicone breast implants have in common? They’ve all brought class action suits against big business.

Three gas utilities made an out-of-court settlement to a class action suit brought by Connecticut contractors. The utilities — Southern Connecticut Gas Co., Connecticut Natural Gas, and Yankee Gas Services — had been accused of harming the plumbing-heating-cooling industry by using unlicensed technicians to do residential service and installation work.

The settlement includes a $542,500 payment from the utilities to the contracting community, most of which will go towards legal expenses. Other non-financial provisions of the settlement, which promote the use of independent contractors by consumers, may constitute a more significant victory.

Precedent-Setting Legal Action

What’s noteworthy here is that class action suits are typically filed by individuals against a corporate entity, as in the silicone implant lawsuits. The utilities argued that the Connecticut contractors named in the class action suit were actually business competitors and therefore should not be allowed to file a class action against the utilities.

“This establishes that a class action is possible on behalf of businesses,” said Connecticut Plumbing-Heating- Cooling Contractors (CT-PHCC) executive director Robert Huppels-berg. The group received legal clearance to submit the suit on behalf of 1,400 PHC member companies.

Initial rulings survived two appeals from the utilities, and a final appeal was thrown out by the state’s Superior Court, adding up to a legal precedent being set in favor of contractors.

This settlement is the first victory of its kind. Said Huppelsberg, “It has been an expensive undertaking. But it has proven that our industry can accomplish a lot if its members cooperate.”

The Settlement

The utilities admitted no wrongdoing, but they did agree to pay $542,500, most of which went to pay the legal fees incurred by the trade associations that got involved at various times during the past five years (see sidebar).

The non-monetary agreements, however, could be much more significant and have a greater positive effect on the contracting community. Non-monetary agreements include:

Requiring the utilities to promote the use of professional contractors in utility mailings for the next five years;

A three- to five-year prohibition on placing utility advertising material on residential equipment;

A three- to five-year prohibition on the use of utility employees for installing certain types of residential and commercial equipment; and

Assistance in developing a contractor referral system.

According to Huppelsberg, the utilities also requested to have representation on the state association’s governing board, to which the contractors’ group readily agreed. “All three utilities will have membership on our board.”

Huppelsberg also said that to date, three, perhaps four utility mailings have gone out recommending the use of professional contractors. These mailings are now generating leads for the state’s contractors.

Pinning the Giant

Huppelsberg pointed out that “Our whole argument has been that the gas companies have every right to compete, but they must do it fairly. This suit clearly defined the rules for free market competition.”

He explained that the groundwork was laid in 1995, when the Connecticut Occupational Licens-ing Board issued a declaratory ruling that the use of unlicensed persons by gas utilities was legal on the supply side, but not on the demand side; in essence, it was not legal for them to send unlicensed personnel into customers’ homes and businesses for the purpose of repairing/replacing gas appliances. The utilities challenged the decision, but it was upheld up through the state Superior Court.

Public Act 95-295 required that utility companies file their apprenticeship materials with the State Apprenticeship Division and called for the mandatory registration of utility service technicians.

This gave contractors here “the legal footing they needed to take the next step and get compensation for their lost business,” according to a Utility Connection bulletin from the PHCC-NA. The suit, filed in November 1995, sought damages under Connect-icut’s Unfair Trade Practices law. CT-PHCC argued that the utilities’ use of unlicensed personnel to do residential service and repair work constituted an unfair trade practice.

The final outcome could well be the level playing field contractors have been looking for.

Contractors “are not political animals, but they appreciate this,” said Huppelsberg. “It’s good for members to know that they [utilities] can be punished. Our vantage point has improved.”