Utility Strikes: Exploring the Utility Damage Case
Last year, an estimated 200,000 utility strikes occurred. This number was down from the estimated 256,000 strikes that occurred in 2007 and the estimated 450,000 strikes that occurred in 2004. Utility strikes carry the potential for enormous liability. In 2008, a construction crew working in Oconomowoc struck a gas line, causing a nearby church to explode, destroying two houses, and injuring seven workers. Given the potential exposure stemming from a utility strike, the importance of limiting your client’s liability cannot be overstated. This article will explore the law governing liability for utility strikes, with an emphasis on how the law may be used to limit liability and damages.
I. The Law Governing Utility Line Placement
When a utility strike occurs, it is important to determine whether the utility line was properly placed. In general, there are four types of utility lines: Electrical supply lines, telecommunication lines, gas pipelines, and water/sewer lines. The National Electrical Safety Code (“NESC”) and Chapter PSC (Public Service Commission) 114 of the Wisconsin Administrative Code govern the depth and height of electrical supply lines. The required height and depth depends on voltage. Generally, electrical supply lines must be at least approximately five meters above streets, driveways, parking lots, and alleys. Buried electrical supply lines must be at least twenty-four inches below ground level; and deeper if they carry over 600 volts.
The height and depth of telecommunication lines are also governed by the NESC. Telecommunication cables must be at least 4.7 meters above streets, driveways, parking lots, and alleys. Like electrical supply lines, buried telecommunication lines of zero to 600 volts must be at least twenty-four inches below ground level, deeper if they carry over 600 volts.
Chapter PSC 135 of the Wisconsin Administrative Code governs the depth of gas pipelines. Section 135.019 incorporates by reference the standards in 49 CFR Section 192, which require gas pipelines to be installed at least twelve inches deep in private property and at least eighteen inches deep under streets and roads. However, “if an underground structure prevents installation at those depths, the service line must be able to withstand any anticipated external load.” Thus, gas pipelines may not always be located at least twelve inches below ground level.
Wisconsin Administrative Code Chapter Comm 82 governs the depth and height of water and sewer lines. The top of water and sewer lines must be no less than forty-two inches below finished grade. However, sewer lines that empty into a septic tank or holding tank must be no less than eighteen inches below finished grade.
II. Duties of Contractors, Employers, & Utilities
Wisconsin law imposes duties on contractors, employers, and utilities with regard to virtually any excavation work that may result in a utility strike. For contractors, the primary source of these duties is the Diggers Hotline Statute, which imposes duties on contractors before, during, and after excavation work. In addition, a separate statute imposes a duty on contractors undertaking work upon, over, along or under public streets and highways. Duties of employers are derived from Wisconsin case law, which requires employers of contractors to inspect the work of their contractors and to make sure that utility strikes are reported and that damage to utility lines is repaired. Wisconsin case law also dictates that owners of utility lines have a duty to mark the lines correctly. Additionally, gas line owners have a duty to inspect and supervise contractors working near their gas lines.
Wisconsin Statutes § 182.0175, known as the “Diggers Hotline Statute,” applies to virtually any situation in which a utility strike could occur. The statute applies to “excavators,” which are defined as any persons engaged in “excavation.” “Excavation” is broadly defined and includes “any operation in which earth, rock or other material in or on the ground is moved, removed or otherwise displaced by means of any tools, equipment or explosives.” Such a broad definition leaves little doubt that the statute applies to almost any situation in which a utility strike could occur.
The Diggers Hotline Statute imposes three requirements on excavators prior to excavation. Excavators must (1) “[t]ake reasonable action to learn the location of any [utility lines] in and near the area where the excavation is to be conducted,” (2) “[p]lan the excavation to avoid to the extent possible interference with [utility lines] in and near the excavation area,” and (3) notify Diggers Hotline at least three working days prior to commencing any non-emergency excavation. Once notified, Diggers Hotline informs its member utility line owners of the proposed excavation. The member utility line owners are responsible for marking their respective utility lines.
The Diggers Hotline Statute also imposes requirements on excavators during and after excavation. During excavation, excavators must maintain at least eighteen inches of clearance between utility markings and the cutting edge or point “of any power-operated excavating or earth moving equipment.” In other words, all excavation work within eighteen inches of utility markings must be conducted by hand. The reason for this requirement is simple: Locating underground utility lines is not an exact science; therefore, the actual location of the utility line could vary from the mark. After excavation, excavators must “inspect all [utility lines] exposed during excavation to ascertain if the [utility lines] have been or may have been struck, damaged, dislocated or disrupted” before backfilling. Excavators must “[i]mmediately notify the owner of a [utility line] if an inspection reveals that the [utility line] has been or may have been struck, damaged, dislocated or disrupted.” Excavators may not backfill until the inspection is completed and the owner of the utility line has made all necessary repairs.
Contractors undertaking work upon, over, along or under public streets and highways must also comply with Wisconsin Statutes Section 66.0831. Pursuant to this statute, contractors must obtain written authority from the commissioner of public works or other appropriate authority if the work is likely to interfere with the structures of a public utility and interrupt, impair or affect the public utility’s service. If the contractor provides the public utility with reasonable notice of the need for temporary protection or temporary relocation, and the commissioner of public works or other appropriate authority agrees, the public utility must temporarily protect or relocate its structures.
Employers of contractors, such as homeowners and business owners, also have a duty to inspect utility lines after excavation work is performed and to report utility strikes. “The general rule is that an employer has a duty to inspect the work of his contractor after completion to make sure that it is left in a reasonably safe condition.” This duty encompasses ensuring that utility strikes are reported and that utility damage is repaired before backfilling. Accordingly, a homeowner or business owner who hires a contractor to perform excavation work must inspect the excavation area to ensure that no utility lines were damaged during excavation, that any utility strikes were reported, and that the damage to the utility line was repaired.
Owners of utility lines have a duty to mark their lines correctly, and owners of gas utility lines have the additional duty to supervise contractors working near their gas lines. Utility companies may be liable for negligently failing to properly mark their cables, lines, or pipes. Diggers Hotline is not responsible for marking utilities; rather, Diggers Hotline merely relays information from excavators to utilities regarding planned excavations. Gas utility companies have an additional duty: Due to the enormous harm that could result from a gas line strike, owners of gas lines must “use ordinary care to inspect or supervise the work of others digging near [their] pipes.”
III. Using the Law to Your Client’s Advantage: Limiting and Shifting Liability
As defense lawyers, we are most interested in reducing the amount of damages and limiting our client’s liability. Whether your client is a contractor, employer, or utility, proper application of Wisconsin law will allow you to do both. The primary way to limit liability is, of course, to comply with the duties Wisconsin law imposes. Complying with these duties will substantially reduce the likelihood of a utility strike. However, once a duty is breached and damages result, the only option is to use the law to shift liability away from your client.
For contractors, compliance with the Diggers Hotline Statute is critical. To substantially reduce liability and the amount of damages in the event of a utility strike, contractors should focus on complying with three requirements under the Diggers Hotline Statute. First, contractors should take reasonable action to determine the location of utility lines in the area to be excavated. Contractors must inform Diggers Hotline of their planned excavation at least three days beforehand. Diggers Hotline will then inform its member utility line owners and the members will mark their respective utility lines. To be sure all utility lines are marked, contractors should confirm with Diggers Hotline that all local utilities are members of Diggers Hotline. Non-members should be contacted directly and informed of the planned excavation.
Contractors should also take reasonable action to determine the location of underground equipment such as underground sprinkler systems and invisible dog fences. The easiest way to determine the location of this equipment is to ask the owner of the property to be excavated. Contractors should then request that the owner mark the probable location of the underground equipment. Requesting that utility lines be marked not only reduces the chance of a utility strike, it also provides an opportunity to shift blame for a utility strike to the owner of the utility line or underground equipment if the utility line or equipment was improperly marked. In addition, Diggers Hotline records all conversations pertaining to utility line locate requests and keeps a hard copy printout for six years. These printouts may prove valuable during litigation to prove the contractor used reasonable care to determine the location of all utility lines in the excavation area.
Second, contractors must use only hand tools within eighteen inches of a marking. As stated above, marking utility lines is an inexact science; therefore, the actual location of the utility line could vary from the position of the marking. Using only hand tools within eighteen inches of the marking will minimize the amount of damage caused by a utility strike. Third, during and after excavation, contractors must inspect all exposed utility lines and other equipment for damage or dislocation and immediately inform the owner of the utility line or other equipment if damage or dislocation is discovered. Prompt notification will give the owner of the utility line or other equipment an opportunity to mitigate damages. Obviously, burying a damaged or dislocated utility line could necessitate substantial future labor costs for the utility line owner. It should also be noted that violation of the Diggers Hotline Statute is punishable by a fine of $2,000 for each offense, with each day of continued violation constituting a separate offense.
Aside from complying with the Diggers Hotline Statute, contractors can limit their liability in a number of ways. Contractors can easily protect themselves by taking pictures of utility lines before backfilling. This simple step allows the contractor to prove he or she inspected the utility line and that the utility line was undamaged. Also, a contractor should never move utility wires or cables or other equipment. Utility wires and cables are property of the utility; therefore, moving the wires or cables constitutes civil trespass. To limit liability, contractors should contact the owners of utility wires and cables or other equipment and request that the owner move the utility wires and cables or equipment. Moreover, moving wires or cables may lead to serious injury for which recovery may be barred. For example, in Reiland v. Wisconsin Valley Electric Co., 202 Wis. 499, 233 N.W. 91 (1930), the court precluded recovery for a construction worker who sustained fatal injuries from contact with a low hanging electric supply wire on a job site. The worker accidentally contacted the electrical supply wire while attempting to move a low hanging telephone wire. The court concluded that the worker failed to exercise reasonable care in moving a telephone wire so close to an electrical supply wire.
When a liability strike occurs, contractors can use Wisconsin law to shift liability to other entities. When working near gas lines, contractors should insist that the gas line owner supervise their work. Owners of gas lines have a duty to inspect or supervise others working near their gas lines. Supervision of excavation work near gas lines will reduce the likelihood of striking a gas line and reduce damages if a strike occurs. It will also allow the contractor to shift liability to the gas company for negligent supervision if a gas line is struck.
Employers also can use the law to limit their liability. Contractors, not employers, have a duty to call Diggers Hotline before excavating; therefore, after a utility strike the employer should determine whether the contractor notified Diggers Hotline at least three days before the excavation. Records of utility line locate requests kept by Diggers Hotline should prove helpful. Employers do, however, have a duty to inspect the work of the contractor to determine whether a utility strike occurred and whether the damage was repaired before backfilling. Therefore, employers can minimize liability by inspecting any exposed utility lines and by promptly reporting any damage. Finally, before excavation begins, employers should notify their contractors of the location of any underground property, such as sprinkler systems and underground dog fences.
Owners of utility lines can limit their liability by marking their lines correctly and supervising the work of contractors. Correctly marking the location of utility lines is the duty of the owner of the utility line, not Diggers Hotline. Therefore, the owner of a utility line will be liable for a utility strike caused by a negligent failure to properly mark utility lines. But when a utility strike occurs, the contractor has a duty to report the strike immediately and the contractor’s employer has a duty to make sure that the strike is reported. Therefore, when faced with liability for damage to a negligently marked utility line, the owner of the utility line should determine how quickly the strike was reported. If the contractor or employer delayed reporting the strike, the utility can argue that the contractor’s delay caused increased damages. Owners of gas lines should, in addition to correctly marking their lines, supervise contractors working near the gas lines to minimize the chance of a strike.
IV. Developing Issues: What Every Defense Attorney Should Know
Defense attorneys should be cognizant of two issues that often arise in utility damage cases. Wisconsin courts have not directly addressed either of these issues. The first issue is whether the owner of a utility line may recover loss of use damages when the line is damaged but the owner is able to reroute service. Courts in other jurisdictions are divided over this issue.
In Level 3 Communications, LLC v. Toomer Electrical Co., Inc., the Eastern District of Louisiana, applying Louisiana law, held that the owner of a utility line could recover loss of use damages despite the fact that the owner was able to reroute communications traffic. In that case, the defendant contractors severed one of the plaintiff’s underground fiber optic communications cables. The plaintiff sought loss of use damages of $229,493.88. The defendant argued that the plaintiff should not be able to recover loss of use damages because such damages would constitute a windfall given the fact that the plaintiff suffered no interruption in service because the plaintiff was able to reroute all traffic from the damaged cable onto another cable within its network. The plaintiff argued that under Louisiana law it was not required to actually obtain substitute property from a third party in order to receive loss of use damages. The plaintiff also noted that it was able to reroute all traffic internally because it had expressly reserved spare capacity for such emergencies. Applying the collateral source rule, the court held that the plaintiff could recover loss of use damages because the defendant should not reap the benefit of the extra cost the plaintiff presumably expended to prepare its system for an emergency. Level 3 Communicationsrepresents the minority view on this issue.
In MCI Worldcom Network Services, Inc. v. Mastec, Inc., the Supreme Court of Florida took a different view. In that case, an excavation company accidentally severed an underground fiber optic cable owned by MCI. MCI suffered no disruption in service because it was able to redirect telecommunications to other cables in its system. Nonetheless, MCI sought loss of use damages of $868,000. Like the plaintiff in Level 3 Communications, MCI argued that it should not be punished for its foresight in installing a backup system to handle emergencies. The defendant argued that MCI should not be awarded loss of use damages because MCI did not suffer an interruption in service or lost profits. The court agreed with the defendant and held that MCI was not entitled to loss of use damages because no loss of service occurred. Moreover, the court concluded that MCI actually saved, rather than incurred, expense in installing a backup system because MCI gained a competitive advantage, enhanced customer service, and avoided expenses it would have incurred but for the existence of the backup system. MCI Worldcom represents the majority view.
Since this issue arises often in utility damage cases, defense attorneys should be aware of the most prominent arguments for, and against, awarding loss of use damages in these types of cases. The most persuasive argument in favor of awarding loss of use damages is that service was actually lost for a period of time. However, even if service was not actually lost, a utility line owner has a number of arguments. Regardless of the fact that service was rerouted, one of the utility lines was damaged and unusable. The inability to use the damaged utility line leads to more than just repair costs for the utility line owner. Additionally, utility line owners can rely on the collateral source rule. The utility line owner incurred additional cost to prepare its communication system for an emergency (such as damage to a cable) and, therefore, the contractor is not allowed to reduce liability by relying on the investment the utility line owner made for its business.
Contractors often rely on two arguments to oppose awarding loss of use damages when a utility line owner is able to reroute service. First, the fundamental principle of the law of damages is that damages awarded should be equal to the injury sustained. Compensatory damages compensate plaintiffs. They do not punish defendants or allow plaintiffs to gain a windfall. Therefore, a utility line owner who does not actually suffer any interruption in service should not be awarded loss of use damages. Second, in response to the collateral source argument, contractors can argue that such excess capacity enables the utility line owner to accommodate varying service needs and is not specifically reserved for emergencies. In other words, the utility line owner did not invest in extra capacity solely to respond to damaged utility lines.
The second issue is whether a utility customer can sue a contractor for lost profits. Only one case has directly addressed this issue. In Byrd v. English, the plaintiff owned a printing business. The business depended on power supplied by a local utility, the Georgia Electric Light Company. While constructing a building near the plaintiff’s business, the defendant negligently severed the electric wires that carried power to the plaintiff’s business. As a result, the plaintiff’s business was out of operation for several hours, and the plaintiff sued the defendant contractor who severed the electrical supply wires for negligence.
The court disallowed the plaintiff’s suit against the contractors. The court reasoned that the contractor had a duty to not negligently injury any person or the property of anyone while working. According to the complaint, the only property damaged was the property of the electric company. Thus, the damage was done to the electric company, not the plaintiff. Moreover, allowing electric company customers to sue contractors for interruptions in service due to the contractors’ actions would lead to virtually unlimited liability for the contractors. More specifically, in addition to the electric company customer, every customer of the electric company customer who received an order late because of the interruption in service could also sue the contractor. Every customer of that customer who received an order late could also sue the contractor. The court found no reasonable stopping point for this liability.
A Wisconsin court would likely reach the same result. Although Wisconsin acknowledges a claim for interference with performance of a contract, the claim requires that the defendant “induce or otherwise purposely cause a third person not to . . . perform a contract with another.” Accordingly, unless the customer can prove the contractor intentionally damaged the utility wire, the claim will likely be disallowed.
From a defense perspective, proper application of and compliance with Wisconsin law allows contractors, employers of contractors, and utilities to reduce the likelihood of a utility strike. If a strike occurs, there are several options for limiting liability and contesting damages.
 Rick Benedict, Common Ground Alliance Report: Contractors Hit Fewer Underground Pipes in 2008, The Daily Reporter, Aug. 25, 2009.
 James A. Carlson, Gas Line Believed Abandoned, Wis. State J., April 9, 2008, at B3.
 Wisconsin Administrative Code Chapter PSC 114 incorporates by reference a modified version of the 2007 edition of the NESC. However, this article will use the standards promulgated in the 1997 edition of the NESC. Because the majority of standards do not apply retroactively, the 1997 version of the NESC likely governs more utility lines currently in place than the 2007 edition of the NESC.
 Inst. of Electrical and Electronics Eng’rs, National Electrical Safety Code 74 (1997).
 Id. at 190.
 Id. at 74.
 Id. at 190.
 Wis. Admin. Code Ch. PSC § 135.019 (2009) (incorporating by reference 49 C.F.R. § 192).
 49 C.F.R. § 192.361(a) (2009).
 Wis. Admin. Code Ch. Comm § 82.30(c) (2009).
 Wis. Stat. § 182.0175(2)(a), (2)(am) (2009).
 Id. § 182.0175(2)(am)(3). The statute does, however, allow for the use of power-operated excavating or earth moving equipment within eighteen inches of utility markings for the purpose of penetrating or removing the surface layer of pavement. In addition, once an underground utility line becomes exposed, the amount of clearance may be reduced.
 Id. § 182.0175(2)(am)(6).
 Id. § 182.0175(2)(am)(7).
 Brown v. Wis. Natural Gas Co., 59 Wis. 2d 334, 347, 208 N.W.2d 769, 776 (1973).
 Id. at 341-42, 208 N.W.2d at 773.
 Id. at 345, 208 N.W.2d at 775.
 Publicly-owned utilities are required to be members of Diggers Hotline. Privately-owned utilities are not, but they often are. Time Warner, AT&T, and We Energies are all voluntary members.
 Wis. Tel. Co. v. Reynolds, 2 Wis. 2d 649, 653, 87 N.W.2d 285, 288 (1958).
 557 F.Supp.2d 745 (E.D. La. 2008).
 995 So.2d 221 (Fla. 2008).
 E.g., MCI Worldcom Network Servs., Inc. v. W.M. Brode Co., 413 F.Supp.2d 868 (N.D. Ohio 2005); MCI Worldcom Network Sers., Inc. v. OSP Consultants, Inc., 78 Fed.Appx. 876 (4th Cir. 2003); MCI Worldcom Network Servs., Inc. v. OSP Consultants, Inc., 585 S.E.2d 540 (Va. 2003).
 43 S.E. 419 (Ga. 1903).
 Wis. Power & Light Co. v. Gerke, 20 Wis. 2d 181, 186-87, 121 N.W.2d 912, 915 (1963).
 Id. (emphasis added).