Ameritech Michigan v. PSC MICHIGAN PUBLIC SERVICE COMM'N

• Decision Date: 26 March 2003
• Docket Number: Docket No. 232820.,Docket No. 230540
• Citation: 254 Mich. App. 675,658 N.W.2d 849
• Parties: Ameritech Michigan, Appellant, v. PSC Michigan Public Service Commission and Patricia PELLAND, a/k/a Patricia Nelski, Appellees. Ameritech Michigan, Appellant, v. PSC Michigan Public Service Commission, Appellee.
• Court: Court of Appeal of Michigan — District of US

658 N.W.2d 849

254 Mich. App. 675

Ameritech Michigan, Appellant, v. PSC Michigan Public Service Commission and Patricia PELLAND, a/k/a Patricia Nelski, Appellees.

Ameritech Michigan, Appellant, v. PSC Michigan Public Service Commission, Appellee.

Docket Nos. 230540, 232820.

Court of Appeals of Michigan.

Submitted August 7, 2002, at Lansing.

Decided January 10, 2003, at 9:00 a.m.

Released for Publication March 26, 2003.

Honigman Miller Schwartz and Cohn LLP (by Daniel J. Demlow and Ruth E. Zimmerman), Craig A. Anderson and Steven L. Berenbaum, Lansing, Detroit, for Ameritech Michigan.

Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and David A. Voges and Michael A. Nickerson, Assistant Attorneys General, for the Public Service Commission.

Before: KIRSTEN FRANK KELLY, P.J. and SAAD and SMOLENSKI, JJ.

KIRSTEN FRANK KELLY, P.J.

These consolidated appeals concern the power of the Public Service Commission (PSC) to sanction telecommunications providers in credit reporting matters and require them to adopt procedures to protect customers against identity theft and respond to complaints regarding related credit reporting issues. In Docket No. 230540, Ameritech Michigan appeals as of right a PSC opinion and order finding it in violation of subsections 502(a) and 502(b) of the Michigan Telecommunications Act (MTA), M.C.L. § 484.2101 et seq.¹ The PSC ordered Ameritech to (1) pay restitution to the complainant, (2) pay fines to the state, (3) apply to the PSC for approval of procedures to better protect its customers from identity theft, and (4) ensure the removal of negative credit information from the complainant's credit reports. In Docket No. 232820, Ameritech appeals as of right an order approving Ameritech's procedures and ordering that they remain in effect until further order. We reverse.

I. Basic Facts and Procedural Background

A. Docket No. 230540

In 1996, Patricia Pelland discovered that someone had fraudulently opened an account in her name for telephone service. Pelland suspected that her former husband had given her social security number and other personal information to a friend, who used the information to fraudulently open accounts. When Pelland contacted Ameritech, an agent informed her that the service would be cancelled and the account turned over to the fraud department. Pelland never received a bill for the service.

In 1999, after being rejected for credit, Pelland discovered a large number of fraudulent accounts on her credit report. Included among them was a debt to Ameritech for $1,022. Pelland sent Ameritech a letter disputing the debt. In response, she received a June 11, 1999, letter indicating that Ameritech had removed Pelland's name from the account and that it would take up to ninety days to clear up the matter. Ameritech's collection agency, Risk Management Alternatives, Inc., also wrote to Pelland on June 15, 1999, stating that the account had been returned to Ameritech and Risk Management would remove any information it placed on Pelland's credit report. Pelland did not receive this letter.

Eight months later, Pelland received another credit report that included the Ameritech account as well as fifteen other fraudulent accounts. Pelland filed a complaint with the PSC alleging that Ameritech's conduct violated § 502 of the MTA. Pelland's subsequent amended complaint asserted that Ameritech: (1) assessed charges against her without authorization; (2) made false, misleading, or deceptive representations regarding rates, terms, or conditions of providing a telecommunications service; and (3) charged her as an end-user for services she did not order. Pelland sought reimbursement of $2,672 for the unauthorized charges and for her time spent correcting the matter. Pelland also requested that fines be imposed on Ameritech.

Following a hearing, the PSC issued an opinion and order. The PSC concluded that Ameritech violated subsection 502(a) because:

[the June 11, 1999, and June 15, 1999, letters] represent that [Ameritech] and its agent will do all that is necessary to clear this account with [Pelland's] name and social security number from their records and those of the credit reporting agencies with whom the companies share credit information. The February 2000 credit report indicates that Risk Management was still reporting an account due of $1,022 under [Pelland's] name. Contrary to [Ameritech's] assertions, the Commission finds that, absent evidence supporting its theory that something went awry at the credit reporting agencies after the notice was given, it is fair to infer that [Ameritech] did not take the action that the letters indicated had been accomplished.

The PSC also found Ameritech violated subsection 502(b) by charging Pelland for service she never ordered. Although Ameritech never billed Pelland, the PSC found that the report to the credit agency amounted to a charge for service.

The PSC ordered Ameritech to (1) pay Pelland restitution of $2,825, (2) pay the state of Michigan $40,000 for two noncontinuing violations of subsection a and $2,000 a day for a continuing two-year violation of subsection b,² (3) file an application in a new docket seeking approval of procedural changes, and (4) take steps necessary to "ensure that credit reporting agencies remove the negative credit information related to the fraudulent account from [Pelland's] credit reports."

B. Docket No. 232820

Part of the PSC order required Ameritech to file an application within thirty days for approval of proposed procedures to better protect its customers from the risk of identity theft. Ameritech was ordered to specifically address (1) procedures to verify the identity of persons ordering service, (2) procedures to ensure that accounts referred to collection agencies and credit reporting bureaus are attributed to the responsible parties, (3) record retention policy, (4) procedures to remove negative information from a customer's credit report when an account has been determined to be fraudulent, and (5) procedures to timely respond to complaints regarding fraudulent accounts or identity theft. In response, Ameritech filed an application under protest, asserting that the PSC exceeded its statutory authority by essentially governing Ameritech's internal business procedures. The PSC approved the application. Ameritech's appeal is limited to the power of the PSC to regulate these matters, and does not concern the actual procedures proposed or implemented.

II. Standard of Review

The standard of review and analysis applied to decisions of the PSC is summarized in Attorney Gen. v. Pub. Service Comm., 231 Mich.App. 76, 77-78, 585 N.W.2d 310 (1998):

Our review of a PSC order is limited. Pursuant to M.C.L. § 462.25 ... all rates, fares, charges, classification and joint rates, regulations, practices, and services prescribed by the PSC are presumed, prima facie, to be lawful and reasonable. Michigan Consolidated Gas Co. v. Public Service Comm., 389 Mich. 624, 209 N.W.2d 210 (1973). An aggrieved party bears the burden of proving by clear and convincing evidence that the order appealed is unlawful or unreasonable. MCL 462.26(8).... An order is unlawful if it is based on an erroneous interpretation or application of the law, and it is unreasonable if it is not supported by the evidence. Associated Truck Lines, Inc. v. Public Service Comm., 377 Mich. 259, 140 N.W.2d 515 (1966). A reviewing court must give due deference to the administrative expertise of the PSC and may not substitute its judgment for that of the agency. City of Marshall v. Consumers Power Co. (On Remand), 206 Mich.App. 666, 677, 523 N.W.2d 483 (1994). However, this does not mean that courts may abandon or delegate their responsibility to interpret statutory language and legislative intent. Miller Bros. v. Public Service Comm., 180 Mich.App. 227, 232, 446 N.W.2d 640 (1989).

Whether the PSC exceeded the scope of its authority is a question of law that we review de novo. Consumers Power Co. v. Pub. Service Comm., 460 Mich. 148, 157, 596 N.W.2d 126 (1999). Indeed, the PSC possesses only the authority granted to it by the Legislature. The statutes that confer power on the PSC are strictly construed, and this Court does not weigh the economic and public policy factors that underlie the actions taken by the PSC. Id. at 156, 596 N.W.2d 126.

III. Subject-Matter Jurisdiction

Ameritech first argues that the PSC lacked subject-matter jurisdiction over the complaint filed by Pelland. We disagree.

Subject-matter jurisdiction concerns a body's abstract power to hear a case of the kind or character of the one pending, and is not dependent on the particular facts of the case. Campbell v. St. John Hosp., 434 Mich. 608, 613-614, 455 N.W.2d 695 (1990). Subject-matter jurisdiction is determined only by reference to the allegations listed in the complaint. Trost v. Buckstop Lure Co., Inc., 249 Mich. App. 580, 586, 644 N.W.2d 54 (2002), quoting Grubb Creek Action Comm. v. Shiawassee Co. Drain Comm'r, 218 Mich.App. 665, 668-669, 554 N.W.2d 612 (1996). If it is apparent from the allegations that the matter alleged is within the class of cases over which the body has power to act, then subject-matter jurisdiction exists. Id. Any subsequent error in the proceedings amounts to error in the exercise of jurisdiction. Id. The erroneous exercise of jurisdiction does not void a body's jurisdiction, but may be challenged only on direct appeal. Thus, the question before us is not whether the facts of Pelland's case supported a finding of a statutory violation, but whether the class of case was properly before the PSC.

The relevant PSC jurisdiction is provided by the MTA. In re Complaint of Southfield Against Ameritech Michigan, 235 Mich.App. 523, 529, 599 N.W.2d 760 (1999). The Court is not required to look outside the four corners of the MTA to determine the power of the PSC with respect to telecommunications services. Id. at 530, 599...