American Phone Inc. v. Northwestern Bell Telephone Co., 16037

• Decision Date: 01 September 1988
• Docket Number: No. 16037,16037
• Citation: 437 N.W.2d 175
• Parties: AMERICAN PHONE INCORPORATION d/b/a Phone American of South Dakota, Plaintiff and Appellee, v. NORTHWESTERN BELL TELEPHONE COMPANY, Defendant and Appellant. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 175

437 N.W.2d 175

AMERICAN PHONE INCORPORATION d/b/a Phone American of South Dakota, Plaintiff and Appellee, v. NORTHWESTERN BELL TELEPHONE COMPANY, Defendant and Appellant.

No. 16037.

Supreme Court of South Dakota.

Considered on Briefs Sept. 1, 1988.

Decided March 8, 1989.

David C. Humphrey, Yankton, for plaintiff and appellee.

Mary Vanderpan, Public Utilities Commission, Pierre, for the commission; Roger A. Tellinghuisen, Atty. Gen., Pierre, on the brief.

Jeremiah D. Murphy, Thomas J. Welk of Boyce, Murphy, McDowell & Greenfield, Sioux Falls, William P. Heaston, Allan L. Grauer of Northwestern Bell Telephone Co. Legal Dept., Omaha, Neb., for defendant and appellant.

STEELE, Circuit Judge.

Pursuant to SDCL 49-13, America Phone Incorporation (Phone America) filed a complaint with the South Dakota Public Utilities Commission (PUC) contending that the amount Northwestern Bell Telephone (Northwestern Bell) billed Phone America for Feature Group A (FGA) service was more than Northwestern Bell originally represented. On appeal the sole issue is whether the PUC had jurisdiction over this complaint. We conclude that the subject of the dispute was intrastate in nature and hold that the PUC properly assumed jurisdiction over the controversy.

Phone America was a reseller of telecommunications service. Northwestern Bell supplies telecommunication lines and related services.

Phone America obtained a switching station in Rapid City, South Dakota. In February 1985 it ordered 72 FGA lines from Northwestern Bell and 18 Wide Area Telecommunications Services (WATS) lines from American Telephone and Telegraph (AT & T), another supplier of telecommunications service. All of the FGA lines were physically located within the state of South Dakota. They were access lines designed to be used to collect incoming calls to the switching station. From there, the calls were either transferred to an intrastate WATS line (for calls terminating in South Dakota) or an interstate WATS line (for calls terminating outside South Dakota).

All 18 WATS lines that Phone America purchased from AT & T were interstate lines. Phone America evidently also purchased four or five intrastate WATS lines at one time, but the record is unclear in this respect. Although under Federal Communications Commission (FCC) tariffs the FGA lines were to be used solely as an access to interstate service, they had two-way capability. Phone America also used FGA lines to complete intrastate calls from the switch as well. Northwestern Bell was aware of this practice. The record reflects that a substantial portion of the telephone communications to and from the Phone America switch were intrastate in nature.

Northwestern Bell's charge for the FGA service was to be a flat rate monthly charge of approximately $315.00 per line. This charge could be reduced by a prorated credit from AT & T. The credit was to be based upon a one WATS line for one FGA line basis for 2500 minutes or more of interstate communications usage. If the credit was applied, the charge for the FGA lines would be reduced to the charge for an ordinary local business line plus a mileage charge.

Northwestern Bell billed the FGA service charge separately. Phone America disputed Northwestern Bell's billing alleging that at the time that the FGA lines were sold, Northwestern Bell's sales representative did not advise Phone America of the mileage charge, or that Phone America could not pick which FGA lines it wanted to prorate, resulting in charges far in excess of what Phone America understood they would be.

Because of these alleged misrepresentations, Phone America filed a complaint with the PUC. Following hearing and a rehearing the PUC adjusted the bill. The decision was appealed to the circuit court. During the pendency of the appeal, Phone America declared bankruptcy and dismissed its appeal. One of the issues on appeal was whether the PUC had jurisdiction over Phone America's complaint. The circuit court held that the PUC did have jurisdiction. We hold that the PUC correctly assumed jurisdiction, and affirm the holding of the circuit court.

Northwestern Bell contends that under the Communications Act of 1934, 47 U.S.C Sec. 151-609 (1982), the FCC is bestowed with exclusive jurisdiction over interstate wire communications. Under this act, common carriers file tariffs relating to interstate communications. Pursuant thereto, Northwestern Bell filed Tariff 52. As a properly filed tariff, it constitutes federal law. American Telephone and T. Co. v. Florida-Texas Frgt., Inc., 357 F.Supp. 977 (S.D.Fla.1973), aff'd, 485 F.2d 1390 (5th Cir.1973).

Tariff 52 limited FGA lines to "use in originating communications from and terminating communications to an Interexchange Carrier's Interstate Service or a customer-provided interstate communications capability." Thus, the FGA lines were designed to collect calls to a switching station. From that point the switching station was to distribute the calls through a WATS line to termination. Under Tariff 52, the prorate credit from AT & T only applied if the FGA service was used to collect interstate telephone calls to be switched to AT & T's interstate WATS lines.

Northwestern Bell argues that the FCC is vested with jurisdiction to hear Phone America's complaint because the FGA lines were designed for and described in the tariff as part of an interstate communications service. We find this argument unpersuasive.

SDCL 49-13-13 authorizes the PUC to hear complaints and to determine...