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December 2, 1993


The opinion of the court was delivered by: MARILYN HALL PATEL

 Plaintiff, United Parcel Service, Inc. ("UPS") brings this action against defendants, the California Public Utilities Commission and various officials in its employ (collectively, "CPUC"), for declaratory and injunctive relief pursuant to the equal protection clause of the United States Constitution and the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202. The action is before the court on defendants' motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). *fn1"

 Having considered the parties' arguments and submissions, and for the reasons set forth below, the court enters the following opinion.


 UPS is a common carrier of small parcels engaged in extensive interstate and intrastate transportation that is subject to regulation by the CPUC. *fn2" In 1938 UPS received an exemption from the CPUC's rate regulation of general common carriers which enabled it to alter its fee structure with greater flexibility than other carriers. The exemption was apparently predicated on the notion that UPS requires such flexibility because it competes directly with the United States Postal Service, which is unregulated. This exemption had continued unaltered since 1938.

 Consistent with earlier rate increases and its special exemption, UPS raised its small parcel delivery rates on January 7, 1992 by filing tariff pages with the CPUC and scheduled the increases to take effect on thirty days notice. The CPUC accepted the tariff pages, and UPS assessed the new rates thereafter. Cal Pak Delivery, Inc., a UPS competitor, subsequently filed a complaint with the CPUC alleging that UPS had utilized the wrong rate increase procedure to institute its rate changes. UPS answered the complaint and, in response to it and to challenges to previous rate increases, filed a formal application in April 1992 asking the CPUC to clarify the procedures UPS was to follow when changing its rates under its long-standing exemption. The CPUC consolidated the two proceedings.

 On February 3, 1993 the CPUC issued Decision No. 93-02-001 articulating for the first time that under the exemption UPS must file a formal rate increase application for rate increases of any magnitude. By contrast, at that time all other common carriers within the state could, on ten days notice, increase rates up to ten percent without seeking CPUC approval. *fn3" Nothing in the decision addressed UPS's request that alternative ratemaking procedures be adopted in light of existing regulations, or UPS's request that CPUC honor an alleged stipulation by CPUC staff that it would continue to allow UPS to institute rate increases without CPUC approval. The decision did, however, give UPS an opportunity to amend its application within thirty days to propose alternative ratemaking procedures. Pursuant to California law, UPS filed for a rehearing of the matter with the CPUC on March 5, 1993 arguing that the decision was inconsistent with prior rulings and violated UPS's state and federal equal protection rights. The CPUC denied UPS's request for rehearing on May 7, 1993. On June 9, 1993 UPS sought review in the Supreme Court of California, and that court denied review without opinion on August 12, 1993.

 On the same day UPS filed for review in state court, it filed the instant action seeking a declaration that the CPUC's requirement that UPS alone among carriers apply to the CPUC for any rate increase violates UPS's right to equal protection under the law. In addition UPS seeks an injunction against CPUC permanently enjoining it from treating UPS in a more restrictive manner than other small package carriers.

 CPUC has moved to dismiss UPS's action pursuant to Federal Rule of Civil Procedure 12(b)(6) on four separate grounds. First, CPUC contends that UPS's equal protection claim was properly before the Supreme Court of California and that the denial of review of that claim has conclusive res judicata effect in this court. Second, CPUC contends that UPS still has a grievance pending before the CPUC such that UPS has failed to exhaust its administrative remedies as required by California Public Utilities Code § 1731(b). Third, CPUC contends that this action is barred by the Johnson Act, 28 U.S.C. § 1342, which limits the ability of federal courts to enjoin state ratemaking orders. Finally, CPUC contends that this court should abstain from exercising jurisdiction over this action pursuant to Younger v. Harris, 401 U.S. 37, 27 L. Ed. 2d 669, 91 S. Ct. 746 (1971).

 In response, UPS argues that denial of review by the Supreme Court of California does not have any res judicata effect in this court because in its petition for review with that court UPS specifically reserved its right to litigate its federal constitutional claim in federal court. Second, UPS contends that it has exhausted its administrative remedies because it filed for and was denied rehearing of the February 3, 1993 CPUC decision and because the matter still pending before the CPUC involves different issues from those raised in this action. Third, UPS argues that the Johnson Act is inapplicable to this action because interstate commerce is implicated by the CPUC decision. Finally, UPS contends that Younger abstention is inapposite because actions taken by the CPUC are legislative, not judicial, and no special circumstances exist warranting abstention.


 A. Conversion to Summary Judgment Motion

 Federal Rule of Civil Procedure 12(b)(6) provides that "if . . . matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56." See also Grove v. Mead School Dist. No. 354, 753 F.2d 1528, 1532-33 (9th Cir.), cert. denied, 474 U.S. 826, 88 L. Ed. 2d 70, 106 S. Ct. 85 (1985); 5A Wright & Miller, Federal Practice and Procedure: Civil 2d § 1366 (2d ed. 1990). Conversion is proper where the parties have notice that the matter may be considered as a motion for summary judgment, and such notice is implied to parties that submit matters beyond the pleadings for consideration. Grove, 753 F.2d at 1533. In addition, where a motion to dismiss raises an affirmative defense not apparent on the face of the pleadings, such as res judicata, conversion to a motion for summary judgment is proper. Suckow Borax Mines Consol., Inc. v. Borax Consol., Inc., 185 F.2d 196, 205 (9th Cir. 1950), cert. denied, 340 U.S. 943, 95 L. Ed. 680, 71 S. Ct. 506 (1951); Wright & Miller, § 1366.

 Both parties to this motion have submitted declarations and other evidence beyond the pleadings, and defendants' motion raises affirmative defenses. Accordingly, the court ...

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