Bullseye Telecom, Inc. v. Cal. P.U.C.

Filed 7/6/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION 5
BULLSEYE TELECOM, INC.,
Petitioner, A160729
v. (Cal. PUC Decision Nos. 19-05-
CALIFORNIA PUBLIC UTILITIES 023 & 20-07-035)
COMMISSION,
Respondent,
QWEST COMMUNICATIONS
COMPANY, LLC,
Real Party in Interest.
ARRIVAL COMMUNICATIONS,
INC., et al., A160908
Petitioners,
v. (Cal. PUC Decision Nos. 19-05-
023 & 20-07-035)
CALIFORNIA PUBLIC UTILITIES
COMMISSION,
Respondent,
QWEST COMMUNICATIONS
COMPANY, LLC,
Real Party in Interest.
COX CALIFORNIA TELCOM, LLC,
Petitioner, A160937
v.
(Cal. PUC Decision Nos. 19-05-
1
CALIFORNIA PUBLIC UTILITIES 023 & 20-07-035)
COMMISSION,
Respondent,
QWEST COMMUNICATIONS
COMPANY, LLC,
Real Party in Interest.
The business context surrounding the disputes in these consolidated
cases may be simply stated: Qwest, the Real Party in Interest, AT&T, and
Sprint are all long-distance carriers. In order to connect a specific California
caller to a specific California recipient, long-distance carriers must purchase
access to local exchange services provided by local carriers. The technical
term for the services provided for local origination and termination of these
long-distance telephone calls is “intrastate tandem-routed switched access
services” (“switched access services”). The petitioners 1 in these cases are
local carriers, operating local exchanges in California that provided services
to Qwest, AT&T, and Sprint.
In its complaint to the Public Utilities Commission (“PUC” or
“Commission”), Qwest alleged, among other things, that the petitioners
discriminated against it by providing AT&T and Sprint with discounted rates
1Petitioners are Arrival Communications, Inc. (Arrival); BullsEye Telecom,
Inc. (BullsEye); Cox California Telcom, LLC (Cox); Mpower Communications
Corp. (Mpower); and U.S. TelePacific Corp. (TelePacific). Arrival, Mpower,
and TelePacific are represented by the same counsel. Petitioners are referred
to as Competitive Local Exchange Carriers (CLECs) by the Public Utilities
Commission, which distinguishes them from the Incumbent Local Exchange
Carriers that existed before the enactment of the Telecommunications Act of
1996. That act “allowed a new class of competitive local exchange carriers . . .
into the local exchange market.” (AT&T Corp. v. F.C.C. (D.C. Cir. 2002) 292
F.3d 808, 809; see also In re Access Charge Reform (2001) 16 F.C.C. Rec.
9923, 9931 (Access Charge Reform).) We commonly but not always refer to
the CLECs as “local carriers” or “petitioners.”
2
for switched access services. Qwest concedes it was not charged more than
the rates set forth in petitioners’ tariffs filed with the Commission. Qwest
sought a refund of amounts it paid to petitioners in excess of the rates
charged to AT&T and Sprint.
Petitioners seek writ review of the Commission’s 2019 decision in
Qwest’s favor. The Commission concluded Qwest showed that it was
similarly situated to AT&T and Sprint and that there was no rational basis
for treating Qwest differently with respect to the rates charged for switched
access services.
In this writ proceeding, petitioners briefly argue the Commission erred
in its legal approach to Qwest’s discrimination claims, but they devote most
of their briefing to three procedural claims and a claim that the Commission’s
remedy, an award of reparations to Qwest (in an amount yet to be
determined), is unlawful. Petitioners’ claims are described at the outset of
the Discussion section below.
The three petitions for writ of review were consolidated in this court,
and we issued a writ of review. We now reject petitioners’ claims and affirm
the Commission’s decision.
BACKGROUND 2
As explained by the Commission, “Intrastate switched access is a
service provided by the Defendant [local carriers] that allows [long-distance
carriers] such as AT&T, Sprint, and Qwest to use . . . local exchange
network[s] . . . to originate and terminate long distance calls to the vast
majority of California residential and business customers. Intrastate
2Petitioners do not challenge the factual and procedural summary in the
Commission’s decision, and we substantially rely on the Commission’s
decision in our background summary.
3
switched access is necessary for the provision of long-distance service . . . in
California.” (Fn. omitted.) (See also AT&T Corp. v. F.C.C., supra, 292 F.3d
at p. 809; United States v. W. Elec. Co. (D.D.C. 1986) 627 F.Supp. 1090, 1095;
Iowa Network Services v. AT&T Corp. (D.N.J, Oct., 2, 2019, Civ A. No. 3:14-
cv-3439) 2019 U.S.Dist. LEXIS 170792, *3–*4.) It is undisputed that long-
distance carriers have no control over which local carrier will provide
switched access services on either end of the call and that, as the Commission
stated below, long-distance carriers “have no choice but to use this service
provided by the individual [local carriers] since there is no other way . . . to
reach the retail subscribers who are making the underlying long distance
call.” Each of the petitioners has an intrastate switched access service tariff
on file with the Commission. It is undisputed the petitioners did not file with
the Commission the individual agreements with AT&T and Sprint providing
for discounted rates.
In April 2009, Qwest filed a First Amended Complaint (“Complaint”)
with the Commission against 24 California local carriers, including the
present petitioners. 3 In the first cause of action, Qwest alleged the local
carriers engaged in rate discrimination in violation of section 453, subdivision
(a), of the Public Utilities Code 4 by providing AT&T and/or Sprint (the
“Contracting Carriers”) switched access services at rates lower than those
filed with the Commission and charged to Qwest, pursuant to individual
agreements with the Contracting Carriers. 5 In the second and third causes of
3 The original complaint was filed in August 2008. Fifteen local carriers were
still involved in the proceeding at the time of the Commission decision at
issue in this writ proceeding.
4 All undesignated statutory references are to the Public Utilities Code.
5 The Complaint also referenced MCI and Global Crossing as long-distance
carriers that had entered into individual agreements, but it is not clear
4
action, Qwest alleged the local carriers violated section 532 and specified
general orders by failing to file the tariffs in the individual agreements with
the Commission and by failing to make the rates available to Qwest. Qwest
requested that the Commission order the local carriers to pay Qwest
reparations, with interest, “in an amount to be proven at hearing.” 6
In 2010, the Commission dismissed the Complaint on the ground that
Qwest had failed to state a claim (Decision 10-07-030) (the “2010 Decision”).
In 2011, the Commission granted Qwest’s request for rehearing (Decision 11-
07-058) (the “2011 Decision”). The 2011 Decision stated that a discrimination
complainant, like Qwest, would “have to show that it was similarly situated
and that there was no rational basis for such different treatment. A showing
that rates lack uniformity is by itself insufficient to establish that they are
unreasonable and hence unlawful. . . . [Citation.] Numerous characteristics
of a particular customer -- volume, calling patterns, cost of negotiation, etc. --
could be sufficient to distinguish one customer from another.” (Id. at 128.)
Further, the complainant must have been “willing to enter into a contract
with the same terms and conditions of service.”
In October 2012, the Commissioner assigned to the matter issued a
“scoping memo” for the proceeding pursuant to section 1701.1, subdivision (b)
whether they were alleged to have done so with California local carriers. In
any event, the parties only reference AT&T and Sprint, who, we observe,
were not parties to the proceedings below and are not involved in the present
writ proceeding.
6 The Commission found the long-distance carriers used financial leverage to
obtain the discounted rates. Petitioners Bullseye, Arrival, Mpower, and
TelePacific entered into the individual agreements with AT&T and/or Sprint
after those long-distance carriers withheld payments. Cox’s discounted rate
was “based upon AT&T’s purchase of large volumes of unrelated services
such as special access (a dedicated service) or other non-jurisdictional
services.”
5
(the “Scoping Memo”), identifying eight core issues to be addressed in the
proceeding. Among others, the issues identified included, “Whether different
treatment was lawful because Qwest was not similarly situated or there was
a rational basis for different treatment;” “Whether Qwest was willing and
able to meet all of the substantive rates, terms and conditions of each of the
contracts [providing other carriers discounted rates];” and “Has [the local
carrier] engaged in unlawful conduct by failing to file its switched access
agreement with the Commission or otherwise make the terms and conditions
of that service publicly available?” The Scoping Memo stated, “The total
reparations sought is approximately $22 million.”
Thereafter, following what the Commission described as “extensive
discovery,” an Administrative Law Judge (“ALJ”) conducted evidentiary
hearings in 2013 that included testimony and the submission of
“approximately 800 exhibits.” In 2015, the ALJ issued a decision denying the
Complaint. In Decision 16-02-020 (the “2016 Decision”), the Commission
agreed and dismissed the Complaint. The 2016 Decision found Qwest was
not similarly situated to the Contracting Carriers, there was a rational basis
for the discount provided to the Contracting Carriers, and Qwest was not
willing to enter into the terms of the individual agreements with those
carriers.
Qwest requested rehearing of the 2016 Decision under section 1731. In
2019, in Decision 19-05-023 (the “2019 Decision”), the Commission granted
rehearing regarding “(1) the determination as to whether Qwest was
similarly situated to the [C]ontracting [C]arriers (. . . AT&T and Sprint); (2)
whether Defendant [local carriers] had a rational basis for treating Qwest
differently; (3) whether Defendant [local carriers] violated sections 453 and
532 by discriminating against Qwest; and (4) whether Defendant [local
6
carriers] failed to comply with the Commission’s requirement to file (or
otherwise make publicly available) off-tariff agreements.” The Commission
stated, “we will not order further proceedings on these issues.” On the basis
of the 2013 record, the Commission “superseded” the 2016 Decision in
concluding that the defendant local carriers violated sections 453 and 532 by
discriminating against Qwest and that the defendants should have filed the
discount agreements with the Contracting Carriers. The decision was based
in significant part on the Commission’s prior characterization of switched
access as a “monopoly bottleneck service.” 7 The amount of refunds due Qwest
as reparations for the discrimination would be determined in a separate
phase of the proceeding.
Petitioners sought rehearing. 8 (§ 1731, subd. (b)(1).) The Commission
denied rehearing but issued Decision No. 20-07-035 (the “2020 Decision”),
which made certain modifications to the 2019 Decision. We refer to the 2019
Decision as modified by the 2020 Decision as the “Rehearing Decision.”
7 The concept of a “monopoly bottleneck” is rooted in antitrust law. Under
the “ ‘bottleneck theory of antitrust law’ . . . a business or group of businesses
which controls a scarce facility has an obligation to give competitors
reasonable access to it.” (Byars v. Bluff City News Co. (6th Cir. 1979) 609
F.2d 843, 856; see also Kearney & Merrill, The Great Transformation of
Regulated Industries Law (1998) 98 Colum. L. Rev. 1323, 1326, fn. 6 [“A
bottleneck facility is ‘a monopoly input needed by both its owner and its
owner’s competitors in the final product market.’ ”]; Turner Broadcast
System, Inc. v. F.C.C. (1994) 512 U.S. 622, 656 [the provider of a “bottleneck”
monopoly service is a “gatekeeper”].) The Commission does not define the
phrase “monopoly bottleneck service,” but it appears to use the phrase to
refer to a service a company is required to obtain from another company in
order to successfully deliver a product to the ultimate consumer and
regarding which the purchaser of the service lacks choice in provider.
8 Defendants Access One, Inc. and Utility Telephone, Inc. also sought
rehearing, but they are not parties to this proceeding.
7
The present petitions for writ of review under section 1756 followed,
filed by BullsEye (A160729); Arrival, Mpower, and TelePacific (A160908); and
Cox (A160937). 9 The Commission and Qwest filed answers, and petitioners
filed replies. (Cal. Rules of Court, rule 8.724.) This court granted the
petitions for writ of review and the parties waived oral argument.
DISCUSSION
Petitioners present various claims of error. They claim the Commission
violated sections 1731 and 1736 in failing to conduct an additional
evidentiary hearing as part of the rehearing process. They also contend the
Rehearing Decision failed to adhere to the legal framework in the Scoping
Memo by (1) allowing Qwest to show it was willing and able to accept only
the switched-access terms of the agreements with the Contracting Carriers;
(2) finding Qwest was similarly situated to the Contracting Carriers without
considering various factors the Commission identified in the 2011 and 2016
Decisions; and (3) treating differences in the cost of providing service as the
only “rational basis” for different rates. Finally, petitioners contend the
Commission violated sections 532 and 734 in concluding Qwest is entitled to
refunds, because any such award would result in the company paying less
than the filed tariffs and result in discrimination against other long-distance
carriers. Petitioner Cox, on its own, raises several issues, including that the
Commission improperly determined for the first time during the rehearing
that switched access is a monopoly bottleneck service.
We reject petitioners’ claims.
9The Cox petition was filed in the Fourth Appellate District, and the Arrival
et al. petition was filed in the Second Appellate District, but the California
Supreme Court transferred the cases to this district in September 2020. This
court consolidated A160729, A160908, and A160937 for purposes of briefing,
oral argument, and decision.
8
I. Writ Review Under Section 1756
The Commission “ ‘is a state agency of constitutional origin with far-
reaching duties, functions and powers. (Cal. Const., Art. XII, §§ 1–6.)
The Constitution confers broad authority on the [C]ommission to regulate
utilities, including the power to fix rates, establish rules, hold various types
of hearings, award reparation, and establish its own procedures. (Id., §§ 2, 4,
6.)’ ” (San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893,
914–915; accord Davis v. Southern California Edison Co. (2015) 236
Cal.App.4th 619, 636.) Additionally, the Public Utilities Act (§ 201 et seq.)
“vests the [C]ommission with broad authority to ‘supervise and regulate
every public utility in the State’ (§ 701) and grants the [C]ommission
numerous specific powers for the purpose.” (San Diego, at p. 915.) “ ‘The
[C]ommission’s authority has been liberally construed’ [citation], and
includes not only administrative but also legislative and judicial powers
[citation].” (Ibid.) “Among these powers, the PUC has the power to issue
equitable relief, including injunctive relief and reparations to ratepayers, as
well as to assess fines and penalties. [Citations.] However, . . . the PUC’s
authority to order reparations to aggrieved ratepayers is limited to
reparations for rates that are ‘unreasonable, excessive, or discriminatory’
(§ 734); the PUC does not have authority to award other damages.” (Davis, at
p. 636.)
Any party aggrieved by a Commission decision “may petition for a writ
of review in the court of appeal . . . for the purpose of having the lawfulness of
the original order or decision or of the order or decision on rehearing inquired
into and determined.” (§ 1756, subd. (a).) “Because review by extraordinary
writ is the only means of judicial review, a court ordinarily has no discretion
to deny a timely-filed petition for writ of review if it appears that the petition
9
may be meritorious.” (Southern California Edison Co. v. Public Utilities
Com. (2006) 140 Cal.App.4th 1085, 1096 (Southern California Edison).)
Accordingly, this court issued a writ of review to assess the merits of the
petitioners’ contentions. (See PG&E Corp. v. Public Utilities Com. (2004) 118
Cal.App.4th 1174, 1193 (PG&E Corp.) [granting writ of review but denying
relief].)
Our role in reviewing the Commission’s decisions is “limited.” (City
and County of San Francisco v. Public Utilities Com. (1985) 39 Cal.3d 523,
530.) “In a complaint or enforcement proceeding, . . . the review by the court
shall not extend further than to determine, on the basis of the entire record
which shall be certified by the [C]ommission, whether any of the following
occurred: [¶] (1) The [C]ommission acted without, or in excess of, its powers
or jurisdiction. [¶] (2) The [C]ommission has not proceeded in the manner
required by law. [¶] (3) The decision of the [C]ommission is not supported by
the findings. [¶] (4) The findings in the decision of the [C]ommission are not
supported by substantial evidence in light of the whole record. [¶] (5) The
order or decision of the [C]ommission was procured by fraud or was an abuse
of discretion. [¶] (6) The order or decision of the [C]ommission violates any
right of the petitioner under the Constitution of the United States or the
California Constitution.” (§ 1757, subd. (a); see also PG&E Corp., supra, 118
Cal.App.4th at p. 1193.)
“[W]hen no constitutional issue is presented, a PUC decision has the
same standing as a judgment of the superior court: it is presumed correct,
and any party challenging the decision has the burden of proving that it
suffers from prejudicial error.” (Pacific Gas & Electric Co. v. Public Utilities
Com. (2015) 237 Cal.App.4th 812, 838.) “Generally, we give presumptive
value to a public agency’s interpretation of a statute within its administrative
10
jurisdiction because the agency may have ‘special familiarity with satellite
legal and regulatory issues,’ leading to expertise expressed in its
interpretation of the statute. [Citation.] Therefore, ‘the PUC’s
“interpretation of the Public Utilities Code should not be disturbed unless it
fails to bear a reasonable relation to statutory purposes and language. . . .”
[Citation.] However, “the general rule of deference to interpretations of
statutes subject to the regulatory jurisdiction of agencies does not apply when
the issue is the scope of the agency’s jurisdiction.” [Citation.] Even in cases
not questioning the jurisdiction of an agency, the interpretation of statutes is
a question of law subject to independent judicial review.’ ” (Pacific Bell
Wireless, LLC v. Public Utilities Com. (2006) 140 Cal.App.4th 718, 729
(Pacific Bell Wireless); see also Southern California Edison Co. v. Peevey
(2003) 31 Cal.4th 781, 796 (Peevy); New Cingular Wireless PCS, LLC v.
Public Utilities Com. (2016) 246 Cal.App.4th 784, 806–807 (New Cingular);
PG&E Corp., supra, 118 Cal.App.4th at pp. 1194–1195.)
II. The Commission Did Not Fail to Conduct a Rehearing
Petitioners contend the Commission failed to conduct a “rehearing” as
required by sections 1731 and 1736 before modifying and superseding the
2016 Decision. We reject the claim.
Section 1731, subdivision (b)(1) provides that, “After an order or
decision has been made by the [C]ommission, a party to the action or
proceeding . . . may apply for a rehearing in respect to matters determined in
the action or proceeding and specified in the application for rehearing. The
[C]ommission may grant and hold a rehearing on those matters, if in its
judgment sufficient reason is made to appear.” Further, section 1736
provides, “If, after such rehearing and a consideration of all the facts,
including those arising since the making of the order or decision, the
11
[C]ommission is of the opinion that the original order or decision or any part
thereof is in any respect unjust or unwarranted, or should be changed, the
[C]ommission may abrogate, change, or modify it.”
In the present case, Qwest requested rehearing of the 2016 Decision,
and petitioners filed a response. In the 2019 Decision, the Commission
granted the request for a rehearing on specified issues. In the same decision,
the Commission explained, “we will not order further proceedings on these
issues. Instead, based on the record evidence and the law, we will reverse
our determinations in [the 2016 Decision], and find that Qwest was similarly
situated to the [C]ontracting [C]arriers and there was no rational basis for
treating Qwest differently. Thus, we determine that Defendant [local
carriers] have violated section 453 and 532 by discriminating against Qwest.
Further, and contrary to our conclusion in [the 2016 Decision], we determine
that the Defendants failed to comply with the Commission’s requirements to
file (or otherwise make publicly available) off-tariff agreements. [¶] Thus, we
will supersede those portions of [the 2016 Decision] which are inconsistent
with today’s decision. Further, we will open a Phase II to consider the issue
regarding refunds.” Subsequently, petitioners filed their own application for
rehearing. The 2020 Decision modified the 2019 Decision in various respects
and stated, “Rehearing of [the 2019 Decision], as modified, is denied as no
legal error has been demonstrated.”
Petitioners contend the Commission failed to proceed in the manner
required by sections 1731 and 1736 because the Commission failed to conduct
additional evidentiary proceedings after deciding to rehear the 2016
12
Decision. 10 The Commission concluded it was not required to conduct such
proceedings, stating in the Rehearing Decision that “[t]here is no language in
sections 1731 through 1736 [Article 2. Rehearings] requiring the
Commission, upon granting rehearing, to hold another evidentiary hearing.”
Petitioners disagree, arguing essentially that “A ‘rehearing’ is simply another
‘hearing.’ ”
It is undisputed the regular “hearing” procedures require the taking of
evidence. Section 1701.1, subdivision (b)(1), provides that a commissioner
assigned to a new adjudication proceeding 11 “shall schedule a prehearing
conference and shall prepare and issue by order or ruling a scoping memo
that describes the issues to be considered and the applicable timetable for
resolution and that, consistent with due process, public policy, and statutory
requirements, determines whether the proceeding requires a hearing.”
Section 1701.2, subdivision (b) provides that if the commissioner “has
determined that an adjudication case requires a hearing, the assigned
commissioner or the assigned administrative law judge shall hear the case in
the manner described in the scoping memo.” Hearing the case includes
developing a “record” to support “findings of fact on all issues material to the
decision.” (§ 1701.2, subd. (e).) Section 1705 provides, “At the time fixed for
any hearing before the [C]ommission or a commissioner . . . the complainant
10 Petitioners also argue the Commission was required to schedule a
prehearing conference, prepare a new scoping memo, and proceed to a
hearing before a commissioner or administrative law judge who would issue a
new decision. We need not separately address those contentions because if
the Commission was not required to conduct a new evidentiary hearing,
neither was it required to comply with those other aspects of the regular
hearing procedures.
11 Section 1701.1, subdivision (d)(2) provides that cases arising from
complaints are adjudication proceedings.
13
and the corporation or person complained of, and such corporations or
persons as the [C]ommission allows to intervene, shall be entitled to be heard
and to introduce evidence.”
Petitioners point out that the rehearing provisions (sections 1731
through 1736) and the hearing provisions (sections 1701 through 1711) are
both included in Chapter 9 of the Public Utilities Act (“Hearings and Judicial
Review”). Further, they point out that section 1701, subdivision (a) states,
“All hearings, investigations, and proceedings shall be governed by this part
and by rules of practice and procedure adopted by the [C]ommission . . . .”
But that language is not helpful to petitioners absent any statutory language
stating that a “rehearing” is equivalent to a “hearing.” 12
In support of their position that any rehearing requires compliance
with the regular hearing procedures in section 1701 et seq., petitioners point
to section 1702.1, entitled “[e]xpedited complaint procedure for small claims.”
Under that section, “when the amount of money claimed does not exceed the
jurisdictional limit of the small claims court,” the Commission may entertain
the complaint in an expedited proceeding without attorneys or a reporter.
The provision relied upon by petitioners, section 1702.1, subdivision (d),
provides that the parties to such an expedited proceeding “may file
applications for rehearing pursuant to Section 1731. If the [C]ommission
grants an application for rehearing, the rehearing shall be conducted under
the [C]ommission’s regular hearing procedure.” (Emphasis added.)
12Petitioners also cite various provisions from disparate areas of the law that
use the term “rehearing.” But none state that a “rehearing” is necessarily
equivalent to a “hearing” or that a “rehearing” must always involve the
taking of additional evidence. Further, rehearing procedures in other
statutory contexts do not control our interpretation of the Public Utilities
Code.
14
Petitioners argue that “[i]n Section 1702.1, the Legislature, evidenced
its understanding that a ‘rehearing’ is simply another hearing.” However, we
believe the provision supports the opposite conclusion. In the situation
contemplated by section 1702.1, subdivision (d), the parties will not have had
the benefit of an initial proceeding with the opportunity to be represented by
counsel and to create a full record. Thus, it is logical in that situation to
provide the parties that opportunity on rehearing. Moreover, the inclusion of
the specific “regular hearing procedure” language in the context of rehearings
in expedited cases demonstrates that the Legislature knew how to mandate
such procedures where intended; the absence of similar language in section
1731 or 1736 supports a conclusion that other rehearings do not need to be
conducted “under the [C]ommission’s regular hearing procedure” (§ 1702.1,
subd. (d)).
The conclusion that a rehearing does not require additional evidentiary
hearings is also supported by comparing the procedures in section 1708.
Section 1708 provides, “The [C]ommission may at any time, upon notice to
the parties, and with opportunity to be heard as provided in the case of
complaints, rescind, alter, or amend any order or decision made by it.”
Section 1708 “permits the [C]ommission at any time to reopen proceedings
even after a decision has become final,” while section 1736 empowers the
Commission “to rehear a decision not yet final.” (City of Los Angeles v. Public
Utilities Com. (1975) 15 Cal.3d 680, 706, italics omitted.) Critically, the
language in section 1708 requiring that parties be provided “opportunity to
be heard as provided in the case of complaints” means the parties must be
provided an opportunity to present evidence. (California Trucking Assn. v.
Public Utilities Com. (1977) 19 Cal.3d 240, 244–245.) As the Supreme Court
explained in concluding a company had been denied its rights under section
15
1708, “[t]he procedure applicable to hearings on complaints filed by the
[C]ommission on its own motion, as occurred here, is prescribed in sections
1701–1706. Section 1705 requires a hearing at which parties are entitled to
be heard and to introduce evidence, and the [C]ommission must issue process
to enforce the attendance of witnesses.” (California Trucking, at pp. 244–
245.) In contrast, sections 1731 and 1736 do not provide that, before issuing
a decision on rehearing, the Commission must provide an “opportunity to be
heard as provided in the case of complaints” or equivalent language.
Petitioner Cox points to section 1734, which provides in part, “If any
application for a rehearing is granted without a suspension of the order
involved, the [C]ommission shall forthwith proceed to hear the matter with all
dispatch and shall determine the matter within 20 days after final
submission.” (Italics added.) The use of the term “hear” in that statute does
not mandate that the Commission follow any particular procedure, in
contrast to section 1702.1, subdivision (d) (“under the [C]ommission’s regular
hearing procedure”) and section 1708 (“with opportunity to be heard as
provided in the case of complaints”). The contrast between the section 1731
et seq. rehearing provisions and sections 1702.1 and 1708 is persuasive
evidence the Legislature did not intend to mandate that the Commission
employ particular procedures on rehearing—the Legislature clearly knows
how to include such mandates when it intends to do so. (See People v.
Norwood (1972) 26 Cal.App.3d 148, 156 [“It is a settled rule of statutory
construction that where a statute, with reference to one subject contains a
given provision, the omission of such provision from a similar statute
concerning a related subject is significant to show that a different legislative
intent existed with reference to the different statutes.”]; accord Los Angeles
16
County Metropolitan Transportation Authority v. Alameda Produce Market,
LLC (2011) 52 Cal.4th 1100, 1108.) 13
We observe that section 1736 only permits the Commission to modify a
decision “after such rehearing and a consideration of all the facts, including
those arising since the making of the order or decision . . . .” (Italics added.)
That language could, in an appropriate case, require the Commission to
receive evidence of factual developments occurring after the decision being
reheard. However, in the present case, the parties do not identify any
relevant factual matters arising after the 2016 Decision. Instead, petitioners
argue that, following the Commission’s determination in the Rehearing
Decision that its legal analysis of the facts established in the 2013 hearing
had been faulty, petitioners were denied the opportunity to present evidence
under that changed legal analysis. 14 As explained in Part IV.C.2, post,
petitioners have not demonstrated they were denied an opportunity to
present evidence in the original evidentiary proceedings relevant to the
issues as framed in the Rehearing Decision. For purposes of the present
argument, it is clear petitioners have not shown the Commission violated
13 The language of sections 1731 and 1736 derives from section 66 of the 1915
Public Utilities Act, codified as part of the Public Utilities Code in 1951.
(Stats. 1915, ch. 91; Stats. 1951, ch. 764; see also footnote 28, post.) This
court has reviewed the legislative histories of the 1915 and 1951 enactments,
and we have found nothing that aids in interpreting sections 1731 and 1736.
In addition, the parties do not direct our attention to any relevant legislative
history.
14 For example, Bullseye and Arrival et al. argue that “a more focused
Scoping Memo would likely elicit a more granular showing on facts that arose
prior to the 2016 Decision, the issues of cost-of-service and the effect of
‘economic duress.’ ” Petitioners also speculate there could be relevant facts
arising after 2013, but such speculation is insufficient to demonstrate
“prejudicial error.” (Pacific Gas & Electric Co. v. Public Utilities Com., supra,
237 Cal.App.4th at p. 838.)
17
section 1736, requiring consideration of facts “arising since the making of the
order or decision.” Indeed, the inclusion of that language rather than a
broader directive to conduct additional evidentiary hearings is further
support for a conclusion that the Legislature did not intend to require the
standard “hearing” procedures to apply to “rehearings.”
Petitioners contend the Commission never “reheard” the matter
because the Commission “granted a rehearing of the 2016 Decision and then
reversed it in the same order.” However, the record shows the petitioners
responded to Qwest’s rehearing petition and subsequently presented their
own rehearing application, resulting in the Rehearing Decision on review.
Petitioners present no reasoning or authority why the Commission’s
consideration of the parties’ briefs and reconsideration of the facts and law in
preparing the Rehearing Decision does not constitute the “rehearing”
contemplated by section 1736.
Finally, our conclusion that the Commission did not err in issuing the
Rehearing Decision without conducting an additional evidentiary hearing is
supported by the proposition that “[o]n judicial review, the [Commission’s]
decisions historically have been generally presumed valid, not to be disturbed
absent a manifest abuse of discretion or unreasonable interpretation of the
relevant statute, particularly on matters of procedure.” (New Cingular,
supra, 246 Cal.App.4th at p. 806; see also Peevey, supra, 31 Cal.4th at p. 796,
quoting Greyhound Lines, Inc. v. Public Utilities Com. (1968) 68 Cal.2d 406,
410–411 [“PUC’s interpretation of the Public Utility Code ‘should not be
disturbed unless it fails to bear a reasonable relation to statutory purposes
18
and language”].) As explained above, the Commission’s interpretation is the
most reasonable interpretation of the statutory scheme. 15
III. The Monopoly Bottleneck Service Determination
Petitioner Cox contends that prior to the Rehearing Decision the
Commission had never decided that switched access is a monopoly bottleneck
service, “and, in so doing, adopted and applied a new regulation retroactively
in violation of its procedural rules.” Cox has not shown the Commission
failed to proceed in the manner required by law.
We agree with the assertion in the Rehearing Decision that “[t]he
Commission has long recognized that switched access is a monopoly
bottleneck service.” Over 25 years ago, before the Telecommunications Act of
1996 (“Telecommunications Act”) opened up local telephone markets to
increased competition, the Commission stated the following: “The foundation
for telecommunications in this country remains to a large degree the public
switched network developed and owned by the [monopoly local carriers].
Consequently, companies operating in relatively competitive
telecommunications areas, such as [long-distance carriers], are frequently
compelled to purchase services from the monopoly [local carriers] when no
other company offers the service and no reasonable alternatives to the service
are available. Of particular concern are the essential services called
monopoly building blocks or bottleneck functions. ¶ . . . An instructive
example is the monopoly building block most pertinent to this proceeding: the
15We also reject petitioner Cox’s suggestion in its reply that, regardless of
whether the Commission was required to conduct additional evidentiary
proceedings, petitioners were entitled to “actually appear and be heard after
the Commission grants rehearing.” Petitioners have not demonstrated the
statutory scheme contains any specific procedural mandates that were
applicable to the rehearing below.
19
need for [long-distance carriers] to purchase access services from the
[monopoly local carrier]. Without access from [the local carrier’s] point of
presence to the end-user, the [long-distance carrier] would be cut off from the
bulk of its actual and potential customers and would be unable to deliver
calls to the intended recipients.” (In re Alternative Regulatory Frameworks
for Local Exchange Carriers (1994) 56 Cal. P.U.C.2d 117, 227 (ARF
Decision).)
Petitioner Cox asserts the Commission has never determined the issue
in the context of local carriers, like petitioners, admitted into the market by
the Telecommunications Act. Cox asserts that the pre-Act incumbent local
exchange carriers and the post-Act competitive local carriers “are two
different types of carriers that were subject to very different regulatory
frameworks during the time period at issue.” However, even assuming that
is true, Cox fails to rebut the Commission’s reasoning in this proceeding that
“It is the nature of the service that is determinative, not who provides it.”
That is, petitioner Cox does not explain why switched access is any less a
monopoly bottleneck service when offered by Cox rather than by the pre-Act
incumbent local carriers. Given that the monopoly bottleneck service
determination in the ARF Decision turned on the nature of the services, we
reject Cox’s contention the Commission was required to make an express
determination that the same analysis would apply when the services were
provided by a local provider like Cox before applying that analysis in this
case.
Petitioner Cox also contends a 2007 decision, Order Instituting
Rulemaking to Review Policies Concerning Intrastate Carrier Access Charges
(2007) 2007 Cal. PUC LEXIS 609 (Intrastate Carrier Access Charges),
supports its position that the switched access services it provides have not
20
been treated as monopoly bottleneck services. We disagree. At the outset, we
note that question was not before the Commission, which decided in that
proceeding to cap competitive local carrier access charges in response to a
petition by a long-distance carrier seeking a reduction in such charges.
(Id. at *2.) The decision does not use the phrase “monopoly bottleneck
service,” but it does acknowledge the monopoly nature of the service, stating
“The record shows allegations of competitive [local] carriers imposing
excessive intrastate access charges, and that the purchasing [long-distance]
carriers are unable to seek alternatives to terminating the call traffic.” (Id.
at *23.) The Commission referenced an FCC decision imposing a different
cap on competitive local carrier rates due to similar concerns. (Intrastate
Carrier Access Charges, at *23.) 16 That FCC decision expressly acknowledged
switched access services are monopoly bottleneck services, stating that “the
terminating and the originating access markets” consist “of a series of
bottleneck monopolies over access to each individual end user.” (In re Access
Charge Reform, supra, 16 F.C.C. Rec. at p. 9935; see also AT&T Corp. v.
F.C.C., supra, 292 F.3d at pp. 809–810.) Accordingly, the Commission’s
Intrastate Carrier Access Charges decision implicitly treats switched access
services provided by carriers like Cox as monopoly bottleneck services even if
the decision does not use that phrase.
Petitioner Cox also focuses on a statement in the 2007 decision that
“Existing contracts between carriers that specify intrastate access charges
are not affected by this decision. Carriers may voluntarily contract with each
other to pay intrastate access charges different from those adopted in today’s
16The Commission did not provide a citation to the FCC decision, but the
Commission’s description matches the decision in In re Access Charge
Reform, supra, 16 F.C.C. Rec. 9923.
21
decision.” (Intrastate Carrier Access Charges, supra, 2007 Cal. PUC LEXIS
609 at *25.) Cox appears to construe that sentence to mean that its
agreement providing a discounted rate to AT&T is lawful, but the sentence
only exempts agreements from the rate caps adopted in the decision. We
reject petitioner Cox’s suggestion that the sentence means the Commission
did not consider switched access a monopoly bottleneck service or that the
Commission intended to express any opinion on whether lower, unfiled rates
not offered to all long-distance carriers could provide the basis for a
discrimination claim. 17
We also reject petitioner Cox’s assertion that the Commission’s decision
in Intrastate Carrier Access Charges “to impose a rate cap instead of requiring
rates to be cost-based means that it did not consider the service to be a
monopoly bottleneck.” In fact, the Commission emphasized the general
principle that “To the extent practical, intrastate access charges should be
cost-based and competitive carriers should charge only for functions provided
to transport a call.” (Intrastate Carrier Access Charges, supra, 2007 Cal. PUC
LEXIS 609 at *32.) The Commission noted that it had previously “eliminated
the non-cost-based component of [AT&T and Verizon’s] access charges,” and
17Petitioner Cox also argues the Intrastate Carrier Access Charges decision
impliedly authorized local carriers not to file contracts providing rates for
switched access services, because the Commission did not state that local
carriers were required to do so, despite being requested to provide
clarification on that topic during the rehearing process. However, Cox has
not shown that was an issue before the Commission in the proceeding, and
we reject the contention that the absence of direction on the issue constituted
a determination a carrier like Cox was not required to file its agreement with
AT&T. We observe that “[o]ne of the principal reasons for requiring a utility
to publish all its rates and conditions of service in a tariff is to prevent or at
least deter discrimination.” (Application of PT&T Co. re 770A PBX Contracts
and Consolidated Proceedings (1978) 83 Cal. P.U.C. 428, 436–437.)
22
that it was “extend[ing] the policy [in that prior decision] to mid-sized, small,
and [competitive local carriers] but tailor[ing] the specific implementation
requirements to fit the unique characteristics of each carrier group.” (Id. at
*19-*20.) Cox fails to explain why the Commission’s analysis is inconsistent
with a recognition that switched access is a monopoly bottleneck service.
In sum, petitioner Cox has failed to show the Rehearing Decision made
a novel determination in treating switched access services as monopoly
bottleneck services in its analysis of Qwest’s discrimination claim. 18
IV. The Commission Did Not Err with Respect to the Scoping Memo
Petitioners Bullseye and Arrival et al. summarize petitioners’ next
claim of error as follows: “[T]he Commission did not adhere to the Scoping
Memo that has governed the hearings and briefing of this matter since 2012.
The 2019 Decision essentially rescinded a critical issue to be considered,
. . . whether Qwest was willing and able to meet all of the substantive rates,
terms and conditions of each of the contracts at issue . . . . The Decision also
narrowed the [issue] of ‘whether different treatment was lawful because
Qwest was not similarly situated or there was a rational basis for different
treatment’ (Scoping Memo, issue (d)), to a single [factor]: whether there was a
difference in the cost-of-service to the [C]ontracting [C]arriers and Qwest, a
criterion not set forth in the Scoping Memo.” 19 We reject petitioners’ claims.
18 Because we reject petitioner Cox’s contention the Rehearing Decision made
a new determination in this respect, we need not address whether any such
determination would constitute the adoption of a new rule or regulation, as
Cox asserts.
19 As mentioned in the background section, in October 2012, the
Commissioner assigned to the matter issued a Scoping Memo identifying
eight core issues to be addressed in the proceeding, including (as relevant to
the present argument) “Whether different treatment was lawful because
Qwest was not similarly situated or there was a rational basis for different
23
A. Legal Background
Section 1701.1, subd. (b)(1)), provides, “The [C]ommission, upon
initiating an adjudication proceeding or ratesetting proceeding, shall assign
one or more commissioners to oversee the case and an administrative law
judge when appropriate. The assigned commissioner shall schedule a
prehearing conference and shall prepare and issue by order or ruling a
scoping memo that describes the issues to be considered and the applicable
timetable for resolution and that, consistent with due process, public policy,
and statutory requirements, determines whether the proceeding requires a
hearing.” (Italics added.) (See also Southern California Edison, supra, 140Cal.App.4th at p. 1104.) Section 1701.2, subdivision (b) provides, “the
assigned commissioner or the assigned administrative law judge shall hear
the case in the manner described in the scoping memo.”
Qwest brought its discrimination complaint under section 453,
subdivision (a), which provides, “No public utility shall, as to rates, charges,
service, facilities, or in any other respect, make or grant any preference or
advantage to any corporation or person or subject any corporation or person
to any prejudice or disadvantage.” Qwest’s discrimination claim was also
brought under section 532, which provides, “no public utility shall charge, or
receive a different compensation for any product or commodity furnished or to
be furnished, or for any service rendered or to be rendered, than the rates,
tolls, rentals, and charges applicable thereto as specified in its schedules on
file and in effect at the time, . . . nor shall any such public utility refund or
remit, directly or indirectly, in any manner or by any device, any portion of
the rates, tolls, rentals, and charges so specified, nor extend to any
treatment” and “Whether Qwest was willing and able to meet all of the
substantive rates, terms and conditions of each of the contracts at issue.”
24
corporation or person any form of contract or agreement or any rule or
regulation or any facility or privilege except such as are regularly and
uniformly extended to all corporations and persons.”
The California Supreme Court provided some guidance regarding rate
discrimination in Hansen v. City of San Buenaventura (1986) 42 Cal.3d 1172(Hansen), although the decision makes no reference to sections 453 and 532.
There, the court stated, “A showing that rates lack uniformity is by itself
insufficient to establish that they are unreasonable and hence unlawful. To
be objectionable, discrimination must ‘draw an unfair line or strike an unfair
balance between those in like circumstances having equal rights and
privileges. . . . “It is only unjust or unreasonable discrimination which
renders a rate or charge unreasonable.” ’ ” (Id. at pp. 1180–1181.)
B. The Commission’s Treatment of the “Willing and Able” and
“Rational Basis”/“Similarly Situated” Issues
1. The “Willing and Able” Issue
Petitioners contend the Rehearing Decision did not address whether
Qwest was willing and able to enter into the full agreements the Contracting
Carriers entered into. Petitioners point out that the Commission’s prior
decisions in the proceeding emphasized the importance of that issue. Thus,
the 2011 Decision, which vacated dismissal of Qwest’s complaint, quoted a
prior Commission decision for the proposition that “ ‘[C]ontracting with
individual customers at rates that deviate from those available under the
tariffs raises the issue of whether such contracts violate the
nondiscrimination provisions of [section] 453[, subdivision (a)]. Courts
reviewing this issue under statutes similar to [section] 453 have concluded
that such contracts are permissible if the rates under the contract are made
available to any similarly situated customer willing to meet the contract’s
terms.’ ” (See ARF Decision, supra, 56 Cal. P.U.C.2d 117, 243.) Then, in
25
2012, the Scoping Memo included the willing and able inquiry as issue (f).
And the 2016 Decision found against Qwest on that issue, determining that
“Qwest did not demonstrate that it was willing to accept all of the contract
terms between the Defendant [local carriers] and the [C]ontracting
[C]arriers.” Rather, Qwest stated “it would have been willing to meet only
the switched access service-related terms and conditions of each of the
agreements between the [local carriers] and the [C]ontracting [C]arriers.”
Although the 2019 Decision addressed the issue in a footnote, the
Rehearing Decision included a separate heading, “Willingness to accept the
same contract terms and conditions.” The Rehearing Decision proceeded to
reject the analysis in the 2016 Decision because switched access is a
monopoly bottleneck service. The Commission reasoned, “The evidence in the
record demonstrates that Qwest was willing and able to meet the intrastate
switched access service related terms and conditions of each of the contracts.
If we were to require Qwest or any other [long distance carrier] to have to
accept the exact same terms and conditions in contracts that include a
monopoly bottleneck service along with other dedicated or non-jurisdictional
services, we would defeat the purpose of our statutory obligation to prevent
discrimination under section 453 and 532.”
2. The “Rational Basis”/“Similarly Situated” Issue 20
Petitioners next assert the Rehearing Decision improperly “departed
from the [S]coping [M]emo” by narrowing the grounds that could constitute a
20 The rational basis and similarly situated questions were intertwined,
because a difference in the cost of providing switched access services was the
one factor the Rehearing Decision specifically identified that could justify
either a finding that Qwest was not similarly situated to the Contracting
Carriers or that there was a rational basis for the different treatment of
Qwest.
26
rational basis for offering different rates to different long-distance carriers.
The Commission first addressed the issue in this proceeding in the 2011
Decision vacating dismissal of the Complaint. The 2011 Decision did not
specify the error it found in the 2010 Decision, but it did summarize the
showing required for a discrimination claim, stating “To prove
discrimination, a carrier will have to show that it was similarly situated and
that there was no rational basis for such different treatment. [Citation.] ‘A
showing that rates lack uniformity is by itself insufficient to establish that
they are unreasonable and hence unlawful. . . .’ [Citation.] ‘Numerous
characteristics of a particular customer -- volume, calling patterns, cost of
negotiation, etc. -- could be sufficient to distinguish one customer from
another.’ ” Contrary to petitioners’ suggestion, the 2011 Decision does not
purport to provide a conclusive or comprehensive list of factors that might
constitute a rational basis for different treatment of long-distance carriers by
local carriers.
The 2012 Scoping Memo followed and identified as issue (d) for
determination: “[w]hether different treatment was lawful because Qwest was
not similarly situated or there was a rational basis for different treatment.”
We observe the Scoping Memo does not specify what can constitute a rational
basis, and it does not limit the range of factors regarding which the parties
could present evidence. It is also significant that, in this proceeding, Qwest
had previously taken the position that, because switched access is a monopoly
bottleneck service, only a difference in the cost of providing the service could
justify different rates. Thus, for example, the 2010 Decision summarized
Quest’s argument as follows: “In its opening brief, Qwest explained that the
Commission’s 2007 decision reinforces the bottleneck nature of access
services, and supports Qwest’s allegations that offering lower rates to certain
27
carriers is unlawful and discriminatory. Qwest also stated that the ‘mere
existence’ of off-tariff contracts did not necessarily violate California law or
Commission regulation, but that offering different rates ‘could only be
justified where the provider . . . establishes that the relevant economic
cost . . . varies between customers.’ ”
Following the 2013 evidentiary hearings, the 2016 Decision found the
evidence showed the local carriers “were required to make a rational,
economics-based business decision to grant discounts to the [C]ontracting
[C]arriers rather than run the risk of not being paid.” The decision did not
address whether the different treatment could be based on a difference in the
cost of providing the services. The decision stated there was “no evidence
provided at [the] hearing by either party which revealed the actual cost that
the [local carriers] incurred to route intrastate switched access service within
California.” Therefore, it concluded, “the underlying cost to provide switched
access service to Qwest versus to the [C]ontracting [C]arriers cannot be
considered here for purposes of deciding whether Qwest and the contracting
carrier were similarly situated.” Although the 2016 Decision did not reach
the cost issue, it implicitly rejected the proposition that the rate difference
could only be supported by a showing of a difference in the cost of providing
services.
The Rehearing Decision rejected the 2016 Decision’s understanding of
the record and its reasoning. The Rehearing Decision concluded Qwest had
shown it was similarly situated to the Contracting Carriers vis-à-vis the cost
of providing switched access services. The decision explained, “The evidence
in the record supports the conclusion that the functionality and service
elements used by the Defendant [local carriers] to provide . . . switched access
to Qwest and to the [C]ontracting [C]arriers were/are identical, as were/are
28
the facilities they were/are provided over. . . . The Defendant [local carriers]
enjoy monopoly bottleneck control over switched access services provided to
their end user customers without regard to the identity of the [long distance
carrier] or the volume of calls completed. . . . Thus, on a call-by-call basis,
every [long distance carrier] is similarly situated.” The Commission agreed
the issue was whether there was a difference in the cost of providing the
services, not the actual cost of providing the services. “ ‘Whether it cost the
Defendant [local carrier] one cent or five cents per minute to provide AT&T
switched access is not relevant to the inquiry. What is critical is whether it
cost that [local carrier] any more or less to provide the identical service to
Qwest as it did to AT&T.’ ”
The Rehearing Decision also rejected the proposition that the
withholding of payments by the Contracting Carriers was sufficient
justification for the different treatment. The Commission stated, “The correct
question is not whether the Defendant [local carriers] had a rational basis for
deviating from their tariff, but whether they had a rational basis for not
offering those same discounted off-tariff contract rates to similarly situated
customers like Qwest.” The local carriers’ “need to preserve revenue” from
the Contracting Carriers was not a rational basis for the different treatment
of Qwest. On that point, the Rehearing Decision appeared to accept Qwest’s
argument that the 2016 Decision “misconstrues the nature of the rational
basis test and adopts a meaningless standard that neuters Section 453 and
532” and “is indefensible since it has the effect of immunizing discriminatory
conduct so long as it aligns with the public utility’s financial self-interest.” 21
21We recognize the evidence showed petitioner Cox provided a discount on
switched access rates to AT&T based on AT&T’s purchase of unrelated
services, not due to the withholding of payments. The distinction does not
affect our analysis of Qwest’s discrimination claims.
29
C. Analysis of Petitioners’ Claims of Error
1. Petitioners Have Not Shown the Commission Erred on the
Merits
The focus of petitioners’ briefing is that the Commission committed
procedural errors in promulgating the Rehearing Decision, not that the
Rehearing Decision’s substantive analysis of Qwest’s discrimination claims is
contrary to law. Nevertheless, we recognize petitioner Cox asserts in support
of its petition that the 2016 Decision’s analysis was correct, and all
petitioners make brief claims of substantive error on reply.
We need not and do not address petitioners’ arguments in detail,
because petitioners fail to provide reasoned argument with citations to
authority that the Commission was obligated to adopt the 2016 Decision’s
analysis of Qwest’s discrimination claims, where the service at issue is a
monopoly bottleneck service. This new legal determination drove the
Rehearing Decision’s reconsideration of the facts. For example, the Decision
stated, “we did not intend for the distinguishing characteristics we discussed
in [the 2011 Decision], such as call volume and costs of negotiation, to apply
to customers of a monopoly bottleneck service.” Similarly, the Rehearing
Decision reasoned on the willing and able issue, “If we were to require Qwest
or any other [long distance carrier] to have to accept the exact same terms
and conditions in contracts that include a monopoly bottleneck service along
with other dedicated or non-jurisdictional services, we would defeat the
purpose of our statutory obligation to prevent discrimination under section[s]
453 and 532.” Petitioners fail to show the Commission’s legal analysis
violated any statutory directives or applicable controlling authority. In
particular, petitioners have not shown the Rehearing Decision is based on an
unreasonable interpretation of the relevant statutes. (Pacific Bell Wireless,
supra, 140 Cal.App.4th at p. 729.)
30
Petitioner Cox primarily relies on the decision in Hansen, supra, 42
Cal.3d 1172. That case, in which nonresidents paid higher water rates than
residents, stated, “the fact that nonresident users of public utility service are
subject to a higher rate than those customers residing within city limits does
not alone prove the rate unreasonable and hence invalid. Rather,
nonresidents must show that the discrimination is not based on ‘cost of
service or some other reasonable basis.’ ” (Id. at p. 1181.) Hansen held the
rate differential could reasonably be based on the circumstance that city
residents, unlike nonresidents, supported the water system through payment
of taxes and water bond liens. (Id. at p. 1184.) Nothing in Hansen precluded
the Commission from concluding that certain non-cost-related bases are
unreasonable in the context of the switched access monopoly bottleneck
service.
We also reject as unfounded petitioners’ assertion that the Rehearing
Decision imposed on them the burden of showing a rational basis for the rate
differential. The Commission stated that Qwest’s “evidence supports the
conclusion that the costs of providing . . . switched access to Qwest was (is)
the same as providing it to the [C]ontracting [C]arriers because tandem
switching and transport elements are priced on a per-minute of use basis
regardless of volume or the identity of the [long distance carrier].”
Petitioners have not shown insufficient evidence supports that finding. 22
22Petitioners also fail to show insufficient evidence supports the
Commission’s finding that “[t]he evidence in the record demonstrates that
Qwest was willing and able to meet the intrastate switched access service
related terms and conditions of each of the contracts.” Notably, petitioner
Cox’s argument in this regard is premised on the assumption that Qwest was
required to accept “the complete contact terms,” not just those related to
switched access services. We also reject petitioner Cox’s contention the
31
Accordingly, the remainder of this court’s analysis proceeds on the
basis that the Commission did not err in concluding that requiring Qwest to
accept all the terms and conditions in the agreements with the Contracting
Carriers would undermine the Commission’s ability to prevent discrimination
in pricing a monopoly bottleneck service and that the differential treatment
of Qwest was not supported by differences in the cost of providing the
services or any other reasonable basis shown in the record. 23
2. Petitioners Have Not Shown the Commission Departed
From the Scoping Memo to Their Prejudice
More significantly, petitioners argue the Commission improperly
deviated from the Scoping Memo in resolving Qwest’s discrimination claim.
In particular, the Scoping Memo identified Qwest’s willingness to accept the
complete terms of the Contracting Carriers’ agreements as an issue relevant
to Qwest’s discrimination claim, and the Scoping Memo did not suggest that
one factor, the comparative cost of providing service, would be a key
Commission erred by including in the Rehearing Decision a specific
discussion of Qwest’s discrimination claim against Cox, which was omitted
from the 2016 Decision. The Rehearing Decision simply clarified that Qwest
was similarly situated to AT&T with respect to Cox’s switched access services
for the same reason given as to the other local carriers—the services were
“provided over identical facilities and at identical cost.”
23 The Commission did not identify any factors other than the cost of
providing services that could justify a rate differential, but it left open the
possibility that other rational bases could exist: “despite ample opportunity to
do so, a review of the evidence in the record confirms that the Defendants
failed to submit any other evidence that would have constituted a rational
basis for discriminating against Qwest such as a difference in cost of service
or other condition.” Qwest bore the ultimate burden of proving unlawful
discrimination. But petitioners have not shown it was error for the
Commission to require them to offer a sufficient justification for the rate
differential, after Qwest established that there was no difference in the cost
of providing services.
32
consideration in resolving the discrimination claim. Petitioners have not
shown the Commission prejudicially departed from the Scoping Memo.
Petitioners rely on the language in section 1701.1, subdivision (b)(1),
requiring the preparation of a “scoping memo that describes the issues to be
considered,” and the language in section 1701.2 requiring that cases be heard
“in the manner described in the scoping memo.” (§ 1701.2, subd. (b).)
Further, section 1701.2, subdivision (e) provides, “The [C]ommission’s
decision shall be supported by findings of fact on all issues material to the
decision, and the findings of fact shall be based on the record developed by
the assigned commissioner or the administrative law judge.” But petitioners
have not shown any deviation from the Scoping Memo was significant or that
they were prejudiced by it. In arguing they were prejudiced by the
Commission’s changed legal analysis, petitioners assert, “The narrow test
applied in the [Rehearing] Decision represents a significant departure from
the Scoping Memo that, consistent with the 2011 . . . Decision, implicitly
apprised the Petitioner and the other defendants that the ‘willing/able’ issue
offered a defense to Qwest’s claims of discrimination. The Scoping Memo
contained no express reference to the direct cost of service.” They argue the
Rehearing Decision narrowed the rational basis inquiry “solely to one of
comparable costs” and “abandon[ed]” the willing and able inquiry altogether.
We agree the 2011 Decision and the Scoping Memo gave petitioners
reason to believe Qwest’s discrimination claim would fail if Qwest were not
willing and able to accept all the terms of the agreements with the
Contracting Carriers or if there were non-cost-related considerations that
33
supported different treatment. 24 However, petitioners have not
demonstrated a violation of section 1701.1 and/or section 1701.2. The
Commission did not fail to consider the issues described in the Scoping
Memo. Instead, with respect to the willing and able issue, the Commission
acknowledged the record showed that Qwest was only “willing and able to
meet the intrastate switched access service related terms and conditions” of
the agreements, but the Commission concluded that was legally sufficient in
the context of a monopoly bottleneck service. And, with respect to the
similarly situated/rational basis issue, the Scoping Memo did not specify any
particular factors that would be considered in the analysis, so the
Commission’s determination that certain factors were not relevant was not
contrary to the Scoping Memo.
Further, petitioners have not shown they were prejudiced by any
departure from the legal framework expressed in the 2011 Decision and
Scoping Memo. Petitioners identify no evidence they could have or would
have presented had they been aware the Commission would ultimately
conclude the exemplary factors briefly referenced in the 2011 Decision
(“ ‘volume, calling patterns, cost of negotiation, etc.’ ”) did not constitute a
rational basis for different treatment in light of the record developed in the
evidentiary hearings and the monopoly bottleneck nature of switched access
services. Importantly, the petitioners knew prior to the evidentiary hearings
that Qwest’s position was, as described in the 2010 Decision, that different
rates could be justified only “ ‘where the provider . . . establishes that the
relevant economic cost . . . varies between customers.’ ” Nothing in the
24Notably, the only issue decided in the 2011 Decision was “whether Qwest’s
complaint had been wrongfully dismissed for failure to state a cause of
action,” and the 2011 Decision did not even explain why the 2010 dismissal
was improper.
34
Scoping Memo prevented or discouraged petitioners from presenting evidence
that their different treatment of Qwest could be justified by a difference in
the cost of providing switched access services. And petitioners have
identified nothing that prevented them from countering Qwest’s evidence
that there was no cost difference with their own evidence of any such
difference.
Notably, petitioners cite to nothing in the record showing they claimed
at any point during the proceedings below that the different rate charged to
Qwest was based on or could be justified by a higher cost of providing
switched access services to Qwest. Indeed, petitioners specifically argued the
lower rate offered to AT&T and Sprint was due to those long-distance carriers
withholding payments or agreeing to buy unrelated additional services, not
lower costs. Further, the Rehearing Decision observed, “the Defendant [local
carriers] did not submit any evidence suggesting that their costs of providing
intrastate tandem-routed switched access to the [C]ontracting [C]arriers were
lower than providing the same to Qwest. A review of the record indicates
that Qwest engaged in vigorous discovery inquiring whether the Defendants
had performed cost of service studies or demand studies in connection with
the off-tariff contracts. Universally, the answer was no.” The absence of such
studies significantly undermines any argument that the discounted rates
provided to AT&T and Sprint were cost-based. Accordingly, petitioners have
shown no basis to conclude they could have made a different showing had the
Scoping Memo stated that the cost of providing service would be critical to
the Commission’s resolution of Qwest’s discrimination claim.
Bullseye and Arrival et al. assert on reply that they “did submit
evidence and testimony showing that their costs to serve Qwest versus the
other carriers was likely to be significantly higher based on differences in
35
points of interconnection, call routing, and traffic types. . . .” However, they
provide no record citation to support that assertion, 25 and, as noted
previously, petitioners have not shown insufficient evidence supports the
Commission’s finding that Qwest met its burden of showing differences in
costs did not justify different treatment. Petitioners argue there was no
evidence of the actual cost of service, but they do not show the Commission
erred in relying on Qwest’s expert’s testimony that the costs were identical
because, as explained in the Rehearing Decision, “tandem switching and
transport elements are priced on a per minute of use basis regardless of
volume or the identity of the [long distance carrier] customer.”
Petitioners cite the decisions in City of Huntington Beach v. Public
Utilities Com. (2013) 214 Cal.App.4th 566, and Southern California Edison,
supra, 140 Cal.App.4th 1085, to support their assertion that “[t]he
Commission may not depart from the scoping memo in a proceeding in a
manner that results in prejudice to a party.” Those cases do not hold the
Commission may not “depart” from a scoping memo and they do not support a
finding of prejudice in the present case. In Huntington Beach, the court of
appeal held the Commission “exceeded the scope of the proceedings” by
concluding a construction project preempted local ordinances where
“[t]hroughout the PUC proceedings, the parties and the [C]ommission
emphasized that a court, not the [C]ommission, would adjudicate the validity
of the City’s municipal ordinances.” (Huntington Beach, at p. 570.) Indeed,
the court observed, “Importantly, the parties stipulated that the validity of
any City ordinance would not be resolved by the [C]ommission,” and the
25 If, in fact, petitioners Bullseye and Arrival et al. did submit such evidence
of a cost differential, it would further establish that the Scoping Memo did
not mislead petitioners to believe such evidence was irrelevant.
36
scoping memo in the case said the proceeding would “not adjudicate the legal
validity of” the City’s ordinances. (Id. at pp. 576, 578.) In that context, the
court rejected “the notion that the scope of the underlying proceeding can be
expanded during the reconsideration process to the detriment of a party” and
held “the [C]ommission violated the procedural rights of the City and thereby
abused its discretion by purporting to ‘preempt’ City ordinances through its
‘approval’ of the Project.” (Id. at pp. 592–593.) In the present case, there was
no stipulation or express language in the Scoping Memo equivalent to that in
Huntington Beach; and, as explained previously, petitioners had opportunity
and reason to present evidence on the cost issue during the evidentiary
hearings.
In Southern California Edison, supra, 140 Cal.App.4th at page 1091,
the court of appeal held the Commission “violated its own procedural rules”
in rulemaking regarding the payment of prevailing wages on energy utility
construction projects. The scoping memo in the case described the issues in
the proceeding as “whether to adopt rules to prohibit ‘bid shopping’ and
‘reverse auctions’ . . . . Neither the preliminary scoping memo nor the scoping
memo suggested that the scope of issues to be addressed included
consideration of a proposed prevailing wage requirement.” (Id. at pp. 1104–
1105.) In that context, the court concluded the Commission “failed to proceed
in the manner required by law” by considering prevailing wages, which was
“beyond the scope of issues identified in the scoping memo,” and by giving the
parties only three business days to address the new issue. (Id. at p. 1106.) In
contrast, in the present case, the Rehearing Decision did not resolve issues
not encompassed by the Scoping Memo, and petitioners had adequate
opportunity to provide evidence on the issues addressed in the Rehearing
Decision.
37
Petitioners assert their “evidentiary showing would have been quite
different if the Scoping Memo in 2012 reflected the Commission’s current
view that only differences in cost-of-service could provide a ‘rational basis for
different rates.’ ” But they fail to show that cost was excluded as an issue by
the Scoping Memo and in the evidentiary hearing—especially in light of the
legal position taken by Qwest and the evidence it presented. If petitioners
had relevant evidence to present on that issue but failed to do so, that was
their own strategic decision and they cannot now be heard to complain.
Petitioners have not shown the Commission failed to proceed in the manner
required by law. 26
V. Petitioners Have Not Shown A Refund Award Would Violate Section
532 or Section 734
“One of the [C]ommission’s express powers is the authority to order
public utilities that charge unlawful rates to make reparation to aggrieved
ratepayers pursuant to” section 734. (Consumers Lobby Against Monopolies
v. Public Utilities Com. (1979) 25 Cal.3d 891, 907 (Consumers Lobby),
disapproved on another ground in Kowis v. Howard (1992) 3 Cal.4th 888.)
After finding that petitioners discriminated against Qwest, the Commission
opened a refund phase, stating “Because we have found discrimination and
violations of section 453 and 532, in which Qwest was overcharged by each of
the Defendant [local carriers] for the identical . . . switched access service
provided to the [C]ontracting [C]arriers at discounted, below tariff rates, we
hereby order, pursuant to section 734, the opening of a Phase II in order to
26 We recognize, of course, that parties to Commission hearings have a right
to due process, which includes “ ‘notice reasonably calculated, under all the
circumstances, to apprise interested parties of the pendency of the action and
afford them an opportunity to present their objections.’ ” (Pacific Gas &
Electric Co. v. Public Utilities Com., supra, 237 Cal.App.4th at p. 859.)
Petitioners have demonstrated no deprivation of due process.
38
resolve the issues of refunds.” As the Commission observes in its brief, the
Rehearing Decision found “Qwest has been harmed to the extent it was
required to pay millions of dollars more for . . . switched access than it would
have paid if it had been provided with the discounted rates.”
The final argument made by petitioners is that, even if they
discriminated against Qwest, the Commission is precluded from awarding
reparations to Qwest because any award would be a rate refund prohibited by
section 532 and would constitute discrimination against other long-distance
carriers in violation of section 734. The contentions fail.
Section 532 provides in relevant part that public utilities may not
charge rates other than those on file with the Commission and may not
“refund or remit, directly or indirectly, in any manner or by any device, any
portion of the rates, tolls, rentals, and charges so specified.” The final
sentence of section 532 provides, “The [C]ommission may by rule or order
establish such exceptions from the operation of this prohibition as it may
consider just and reasonable as to each public utility.” Petitioners also rely
on language in section 734, which states that, where the Commission has
found that a public utility has unlawfully charged a discriminatory rate, “the
[C]ommission may order that the public utility make due reparation to the
complainant therefor, with interest from the date of collection if no
discrimination will result from that reparation.” (Italics added.) 27
27Section 734 provides in full: “When complaint has been made to the
[C]ommission concerning a rate for a product or commodity furnished or
service performed by a public utility, and the [C]ommission has found, after
investigation, that the public utility has charged an unreasonable, excessive,
or discriminatory amount therefor in violation of any of the provisions of this
part, the [C]ommission may order that the public utility make due reparation
to the complainant therefor, with interest from the date of collection if no
39
As to section 532, petitioners argue, “If there is no exception to the
contract filing requirement, as the [Rehearing ]Decision holds, and because
the contract rates were never filed, the only rates that [petitioners] were and
are permitted to charge and receive were the filed rates established in their
filed tariffs.” They continue, “Refunds to Qwest would in effect provide Qwest
the benefit of an unfiled rate, in violation of [s]ection 532 . . . .” As to section
734, petitioners focus on the “no discrimination will result” language, arguing
“A refund to Qwest would provide Qwest the same benefit that Qwest
contends was received by [AT&T and Sprint]. Accordingly, that award would
result in discrimination against other [long-distance carriers] in California
that, like Qwest, paid the rates established in the [filed tariffs].”
Petitioners cite no authority supporting their interpretations of sections
532 and 734. In construing the statutes, we find instructive an early
California Railroad Commission decision, a prior Commission decision, and a
decision of the Fourth District Court of Appeal. First, in 1915, in Steiger etc.
Co. v. S.P. Co. (1915) 7 C.R.C. 288, the California Railroad Commission
interpreted the same “no discrimination” language in section 734 in the
context of a predecessor statute, section 71, subdivision (a) of the former
Public Utilities Act (Stats. 1915, ch. 91, § 71, p. 164). 28 In that case, several
discrimination will result from that reparation. No order for the payment of
reparation upon the ground of unreasonableness shall be made by the
[C]ommission when the rate in question has, by formal finding, been declared
by the [C]ommission to be reasonable, and no assignment of a reparation
claim shall be recognized by the [C]ommission except assignments by
operation of law as in cases of death, lack of legal capacity to make decisions,
bankruptcy, receivership, or order of court.”
28 The former Public Utilities Act defined the powers of the Railroad
Commission (Stats. 1915, ch. 91), which was renamed the Public Utilities
Commission in 1946 (Independent Energy Producers Assn. v. McPherson
40
companies filed complaints seeking reparations on the ground that the
defendant had charged unreasonable rates for the shipment of goods over its
rail lines. The provision at issue there was, in substance, nearly identical to
section 734, authorizing reparations for “excessive and discriminatory” rates
“[p]rovided, no discrimination will result from such reparation.” 29 The
Railroad Commission concluded that language did not prohibit the payment
of reparations, even if other companies may have paid the same unreasonable
rate. The Railroad Commission reasoned that discrimination does not “arise
because, from among those who have been injured and can establish
damages, only a few seek and obtain awards of reparation. . . . If ‘A’, who has
been injured, does not seek redress he cannot be heard to complain of
discrimination because ‘B’, who has also suffered a private injury, seeks and
obtains redress.”
(2006) 38 Cal.4th 1020, 1038). In 1951, the Legislature enacted the Public
Utilities Code, consolidating and codifying the law relating to public utilities,
including the statutes at issue in the present case. (Stats. 1951, ch. 764.)
Section 532 mirrors section 17, subdivision (b) of the former Public Utilities
Act, and section 734 mirrors section 71, subdivision (a) of that act. (See
Consumers Lobby, supra, 25 Cal.3d at p. 907 [identifying section 71 as
“predecessor to” section 734].) This court has reviewed the legislative
histories of the 1915 and 1951 enactments, and we have found nothing that
aids in the interpretation of sections 532 and 734. Neither do the parties
direct our attention to any relevant legislative history.
29 As enacted, section 71, subdivision (a) of the former Public Utilities Act
provided, “When complaint has been made to the [C]ommission concerning
any rate, fare, . . . or commodity furnished or service performed by any public
utility, and the [C]ommission has found, after investigation, that the public
utility has charged an excessive or discriminatory amount for such product,
commodity or service, the [C]ommission may order that the public utility
make due reparation to the complainant therefor, with interest from the date
of collection; provided, no discrimination will result from such reparation.”
41
Next, in The Mark Hopkins Intercontinental Hotel v. Pacific Gas &
Electric Co. (1987) 1987 Cal. PUC LEXIS 564 (Mark Hopkins), the
Commission independently reached the same conclusion, and also addressed
section 532. That case involved a complaint seeking interest on three years
of refunded electricity overcharges. (Id. at *1-*2.) The defendant argued that
an award of interest to the complainant would constitute discrimination
prohibited by section 734 and “preferential rate treatment” prohibited by
section 532. (Mark Hopkins, at *5.) The Commission assumed for the
purposes of its analysis that there were other customers with similar claims,
but rejected the defendant’s objection, reasoning that the company “has not
pointed out any circumstance which would have barred [other customers]
from successfully prosecuting a complaint such as this. If similarly situated
customers can win similar relief, the discrimination prohibited by [section]
734 does not exist, and the statute does not bar awarding interest on
reparations to complainant.” (Mark Hopkins, at *5-*6.) The Commission
further concluded that the award was not precluded by section 532, reasoning
that “[section] 532 should not be interpreted to prohibit an award permitted
by [section] 734.” (Mark Hopkins, at *6.) The Commission articulated as its
conclusion of law, “A single customer can collect his own claim in full under
[sections] 532 and 734 if all other customers with similar claims had the
same opportunity to file a complaint with the Commission.” (Mark Hopkins,
at *7.)
Finally, the Fourth District’s decision in Cellular Plus, Inc. v. Superior
Court (1993) 14 Cal.App.4th 1224 (Cellular Plus), is also instructive. That
case was an action by individual consumers and corporate sales agents
against two licensed providers of cellular telephone service. (Cellular Plus, at
p. 1229.) The plaintiffs alleged price fixing under California’s Cartwright
42
Act, and the court of appeal held the trial court erred in sustaining the
defendants’ demurrers. (Cellular Plus, at p. 1229.) As relevant in the
present case, the court of appeal rejected the defendants’ argument that a
damages award would necessarily “result in an illegal rate refund violating
. . . section 532 or an illegal rate discrimination violating . . . section 453,
subdivision (a).” (Cellular Plus, at p. 1249.)
The Cellular Plus court’s analysis of the rate discrimination issue is
directly applicable to petitioners’ argument under section 734. There, the
individual plaintiffs sought “compensatory damages in the amount and to the
extent the fixed prices were excessive.” (Cellular Plus, supra, 14 Cal.App.4th
at p. 1250.) The court concluded the plaintiffs’ action “will not result in any
prohibited rate discrimination” because the “damages are not any different
from what damages any other customer . . . may be entitled to, and
[plaintiffs] should not be precluded from seeking compensatory damages
merely because other customers do not similarly enforce their rights to
damages.” (Ibid.) 30
We reject petitioners’ contention that an award of reparations under
section 734 would violate the “no discrimination” limitation in section 734 or
constitute a rate refund prohibited by section 532. As to section 734, we
agree with Steiger, Mark Hopkins, and Cellular Plus that an award of
reparations to Qwest due to petitioners’ rate discrimination would not
30Cellular Plus also rejected the defendant’s argument under section 532 as
to the corporate sales agents, because they sought damages for lost sales
rather than a rate refund. (Cellular Plus, supra, 14 Cal.App.4th at p. 1250.)
However, the court did not explain its rationale for rejecting the defendant’s
argument as to the individual plaintiffs, who sought compensation for the
excessive rates paid. Because Qwest’s posture is analogous to the individual
plaintiffs in Cellular Plus, the decision provides no assistance in applying
section 532 in the present case.
43
constitute discrimination against other long-distance carriers that, like
Qwest, were denied the discounted rates provided to AT&T and Sprint.
Petitioners do not suggest those other carriers could not also have sought the
relief Qwest seeks in the present proceeding. Such reparations would not
constitute discrimination absent a showing that other customers with similar
claims did not have “the same opportunity to file a complaint with the
Commission.” (Mark Hopkins, supra, 1987 Cal. PUC LEXIS 564 at *7.) 31
As to section 532, we agree with the Commission in Mark Hopkins that
it would be unreasonable to interpret section 532 “to prohibit an award
permitted by [section] 734.” (Mark Hopkins, supra, 1987 Cal. PUC LEXIS
564 at *6.) Further, the final sentence of section 532 states, “The
[C]ommission may by rule or order establish such exceptions from the
operation of this prohibition as it may consider just and reasonable as to each
public utility.” The Commission has previously observed that section 532
provides it the “power to deviate . . . if it finds special circumstances that
justify doing so. Special circumstances include inequitable or unjust results.”
31 Separately, petitioner Cox contends an award to Qwest would constitute
discrimination against AT&T in violation of section 734, “because an award
of refunds to [Qwest] would grant [Qwest] the benefit of AT&T’s rate without
imposing any of the corresponding burdens.” Cox continues, “Cox charged
AT&T a rate lower than its tariff rate in exchange for AT&T purchasing [an]
increased volume of special access services. [Citation.] By affording [Qwest]
the benefit of that negotiated rate without imposing any of the corresponding
burdens or consideration on [Qwest], the Commission deprives AT&T of the
benefit of its bargain.” The Commission found that the discounted rate was
based on AT&T’s purchase of “non-jurisdictional services”—not necessarily
even in California. Cox cites no authority and provides no reasoned
argument that a finding of discrimination within the meaning of section 734
may be based on a comparison of the entirety of services purchased from Cox
(including out-of-state services), rather than a difference in the rate paid for
intrastate switched access services.
44
(Western Metals & Strapping Corp. v. Brake Delivery Service – Meier Transfer
Service (1995) 60 Cal. P.U.C.2d 349, 356 (Western Metals).) Petitioners do not
show the Commission could not, as part of an award of reparations under
section 734, declare that a refund of excess amounts paid due to rate
discrimination is “just and reasonable,” within the meaning of section 532. 32
In any event, given that the Commission has yet to make such an award to
Qwest, it would be premature for this court to conclude in the present
proceeding that any award resting on any such declaration would necessarily
violate section 532.
Petitioners argue their interpretation of section 532 is supported by the
California Supreme Court’s decision in Empire West v. Southern California
Gas Co. (1974) 12 Cal.3d 805 (Empire West). That case is distinguishable.
There, the plaintiff developer sued the defendant gas company because the
developer had relied upon the company’s erroneous costs analysis in
installing a gas heating system. (Empire West, at p. 808.) The Supreme
Court considered whether the action constituted an effort to obtain
preferential rate treatment in violation of section 532. Ultimately, the
Supreme Court held section 532 did not apply to the plaintiff’s claim,
reasoning that the case did not involve rates and “a utility customer who has
been actually damaged by a utility’s fraudulent misrepresentations regarding
32In a footnote in their reply, petitioners Bullseye and Arrival et al. argue for
the first time that the Commission could not retroactively establish an
exception to the filing requirement with respect to the agreements with the
Contracting Carriers. But, assuming that is so, that would not prohibit the
Commission from ordering an exception to the prohibition on rate refunds in
the present case. In addition, petitioners have not shown a refund in this
case would constitute retroactive ratemaking, which involves improper
adjustments to rates established in prior proceedings and not reparations for
discrimination. (See Ponderosa Telephone Co. v. Public Utilities Com. (2011)
197 Cal.App.4th 48, 61.)
45
matters not contained in the published tariffs should be entitled to bring suit
to recover those damages.” (Empire West, at pp. 810–811.)
The present case is distinguishable from the circumstances underlying
Empire West’s analysis of section 532. Empire West did not address a
situation where a utility discriminated against a complainant by failing to
offer the benefit of an off-tariff rate. Instead, Empire West describes cases
where complainants claim they were misled about the tariffed rate and
attempt to obtain a deviation from that rate, even though they are charged
with knowledge of the tariffed rate and could not “justifiably rely” on any
misrepresentations. (Empire West, supra, 12 Cal.3d at p. 810.) In contrast,
there was no unjustifiable reliance on Qwest’s part—the off-tariff rates
provided to AT&T and Sprint were simply not offered to Qwest. Further,
Empire West involved a civil action seeking damages, not a request for
reparations expressly authorized by statute (here, section 734). Finally, in
Empire West there was no consideration of the Commission’s authority under
section 532 to order exceptions. In contrast to the circumstances described
in Empire West, here petitioners claim that, because they did not file their
discounted rate with the Commission and because they may have
discriminated against other long-distance carriers in addition to Qwest, the
Commission is powerless to provide reparations to Qwest. Petitioners make
no effort to explain why the Legislature would have intended that result. 33
33 Petitioners argue that there were alternate remedies available to redress
the discrimination against Qwest. For example, they argue that the
Commission could have required the Contracting Carriers “to remit payment
for undercharges to put all customers on equal footing,” or that Qwest “could
have sought damages for any alleged competitive injury sustained as a result
of another customer paying less.” We need not and do not consider the
viability of those alternatives because we have concluded petitioners have not
shown a reparations award would violate sections 532 or 734.
46
Petitioners also contend a refund award in the present proceeding
would be inconsistent with the “filed rate doctrine,” but they rely on cases
applying federal law and fail to show the doctrine applies under California
law. The federal filed rate doctrine prohibits a utility from charging rates
other than as set forth in its tariff filed with the federal authorities and
“presumes the consumer’s knowledge of all lawful rates and bars consumer
suits for damages arising out of claims involving those rates, on the premise
that a consumer who pays the filed rate has suffered no injury and incurred
no damage.” (Day v. AT & T Corp. (1998) 63 Cal.App.4th 325, 329; see also
Evanns v. AT&T Corp. (9th Cir. 2000) 229 F.3d 837, 840; Gallivan v. AT&T
Corp. (2004) 124 Cal.App.4th 1377, 1387; Verizon Delaware, Inc. v. Covad
Communications Co. (9th Cir. 2004) 377 F.3d 1081, 1089.) The Commission
has previously acknowledged that section 532 “express[es] the filed rate
doctrine,” but it observed the statute grants it “great flexibility in how it
regulates adherence to” the doctrine. (Western Metals, supra, 60 Cal.
P.U.C.2d at p. 356; see also Pink Dot, Inc. v. Teleport Communications Group
(2001) 89 Cal.App.4th 407, 416 [“direct application of the federal filed rate
doctrine is inappropriate. ¶ . . . In California, there are limits to the filed rate
doctrine”]; County of Stanislaus v. Pacific Gas & Electric Co. (9th Cir. 1997)
114 F.3d 858, 866 [stating that a prior California decision “declined to create
a state filed rate doctrine where rates filed with the [Commission] were not
subject to federal review”].) This court has already concluded that petitioners
have not shown a refund award would violate sections 532 and/or 734. And,
in any event, none of petitioners’ authorities applying the federal filed rate
doctrine involve circumstances similar to those in the present case, involving
an anticipated Commission reparations order authorized by the Public
Utilities Code to remedy discrimination, rather than a damages award in a
47
court action under another statutory scheme. (Cf. Day, at p. 337 [concluding,
in case subject to federal law, that filed rate doctrine precluded monetary
recovery in an unfair business practice action].)
Petitioners have not shown that any refund award to Qwest would
violate section 532 and/or section 734. 34
DISPOSITION
The Commission’s decision—D.19-05-023, as modified by D.20-07-035—
is affirmed. Respondent and the real party in interest shall recover their
costs in this proceeding. (Cal. Rules of Court, rule 8.493(a)(1)(A).)
34 In construing sections 532 and 734, we have given the Commission’s view
“consideration and respect.” (Yamaha Corp. of Am. v. State Bd. of
Equalization (1998) 19 Cal.4th 1, 7.) Because we reach our conclusion
without extending any special deference to the Commission’s interpretation
of the statutes, we need not decide what level of deference would be
appropriate where the question is the Commission’s authority to issue
reparations for discrimination. (See New Cingular, supra, 246 Cal.App.4th at
p. 807 [concluding Supreme Court’s Yamaha decision, rather than the
Greyhound decision, governs review of Commission’s “interpretation of a
statute that defines the reach of its power to enter the awards under
review”].)
48
SIMONS, Acting P.J.
We concur.
NEEDHAM, J.
RODRIGUEZ, J. *
(A160729, A160908, A160937)
*Judge of the Alameda County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
49
Original proceedings; petition for a writ of review of decisions of the
California Public Utilities Commission.
Goodin, Macbride, Squeri, and Day, Thomas J. Macbride Jr. and Megan
Somogyi; Klein Law Group, Andrew M. Klein, Allen Zoracki for Petitioner
Bullseye Telecom Inc.
Goodin, Macbride, Squeri, and Day, Thomas J. Macbride Jr. and Megan
Somogyi for Petitioners Arrival Communications, Inc., Mpower
Communications Corp, and U.S. TelePacific Corp.
Tobias Law Firm, Margaret L. Tobias; Coblentz, Patch, Duffy, & Bass,
Richard R. Patch, Clifford E. Yin, Laura R. Seegal for Petitioner Cox
California Telecom, LLC.
Arocles Aquilar, Mary McKenzie, and Maria Bondonno for Respondent.
Law Offices of Leon M. Bloomfield and Leon M. Bloomfield; Perkins Coie,
James W. McTarnaghan for Real Party in Interest
50