Beehive Telephone Co. v. PUBLIC SERVICE COMM'N, No. 20020182

• Court: Supreme Court of Utah
• Writing for the Court: DURRANT, Associate Chief Justice
• Citation: 89 P.3d 131,2004 UT 18
• Parties: BEEHIVE TELEPHONE COMPANY, Petitioner, v. PUBLIC SERVICE COMMISSION OF UTAH, Respondent.
• Docket Number: No. 20020182, No. 970290, No. 20000040.
• Decision Date: 24 February 2004

89 P.3d 131
2004 UT 18

BEEHIVE TELEPHONE COMPANY, Petitioner,
v.
PUBLIC SERVICE COMMISSION OF UTAH, Respondent

Nos. 20020182, 970290, 20000040.

Supreme Court of Utah.

February 24, 2004.

89 P.3d 133

Alan L. Smith, Salt Lake City, for petitioner

Sander Mooy, Salt Lake City, for respondent.

DURRANT, Associate Chief Justice:

¶ 1 This petition for review concerns a fine imposed by the Public Service Commission of Utah ("the Commission") against a utility for violation of the utility's tariff. In April 1997, the Commission fined Beehive Telephone Company ("Beehive") $182,500 for improperly charging long distance rates for calls made to local area cellular prefixes in violation of

89 P.3d 134

Beehive's tariff. The Commission initially suspended the fine subject to compliance with its order, but vacated the suspension after Beehive failed to comply with the terms of the suspension. The Commission later reduced the fine to $15,000. On review, Beehive challenges this fine. We affirm in part and remand for further proceedings in accordance with our opinion

BACKGROUND

¶ 2 Beehive provides telephone services to customers in central Tooele County, Utah, including the communities of Rush Valley, Terra, Vernon, and parts of Skull Valley. Under Beehive's governing tariff, Rush Valley and Vernon are included within an Extended Area Service ("EAS") territory with Tooele.¹ EAS territories are established by the Commission and allow customers to place unlimited calls within a territory on a flat-rated or set monthly charge, in contrast to toll billing or long distance calling, where each individual call is charged based on the distance between calling areas and the duration of each call. Because EAS territories are not established in terms of geographic regions served by telephone providers, service within an EAS territory may be provided by more than one telephone utility. Thus, by the general terms of Beehive's tariff, except during overflow periods,² customers in Rush Valley and Vernon who paid the monthly EAS fee should have been able to call cellular phones with Tooele prefixes for no additional charge.³ It was Beehive's policy, however, to charge long distance rates for such calls regardless of overflow periods. Beehive explained this practice to its customers in a May 1996 newsletter, in which it stated:

Several of you have asked why you can't dial 830 xxxx and 840 xxxx [Tooele] numbers toll free anymore. These numbers are assigned to pagers and [c]ell phones. Initially we allowed toll free calling to those numbers but those companies never signed agreements with us to compensate us for the expense of completing those calls to the non-wire line telephone companies operating out of Tooele. No more. If you wish to call those prefix's [sic] it is only possible by your paying the long distance charge. Those customers who have deducted the long distance charges to call will be expected to pay the long distance charges to call those numbers.

(Emphasis added.)

¶ 3 On May 10, 1996, the Utah Division of Public Utilities ("the Division") informed Beehive that it had received an informal complaint from a Vernon subscriber that he, and many of his neighbors, were being billed for toll calls to the Tooele 830 prefix and that such action directly violated Beehive's tariff. In reply to the Division's letter regarding "[Beehive's] policy of not allowing use of EAS trunks to Tooele to interconnect with non-wire-line ... telephone carriers," Arthur W. Brothers, Beehive's CEO, responded that Beehive would open up its EAS circuits "on order of the Commission" but "[would] not plan[ ] to allow such use without a [Commission] order."

¶ 4 On July 8, 1996, the Division filed a petition with the Commission for an order to show cause in response to numerous complaints in the Tooele County area regarding poor quality of service and billing errors, in

89 P.3d 135

addition to improper charges to subscribers for landline calls made to cellular phones with prefixes within the Tooele EAS calling area. The Commission granted the Division's petition and directed Beehive to appear before an administrative law judge and show cause why it was (1) "not in violation of Utah Code Ann. [s]ection 54-3-1 for failing to provide adequate service," (2) "not in violation of Commission rule R746-240-4 governing account billing procedures," and (3) improperly "charging subscribers toll charges for local cellular calls."

¶ 5 On August 16, 1996, the administrative law judge issued an order requiring the Division and Beehive to submit a joint statement of factual and legal issues to be addressed at trial. The Division's statement of issues in response to that order stated clearly that one such issue was the fact that Beehive was billing toll charges to subscribers who made local calls to cellular phones with Tooele prefixes. The Division explained that Tooele was in the EAS territory with Rush Valley and Vernon, and that Beehive had no tariff allowing it to charge any differently with respect to cellular services. In its response, Beehive did not deny that it was charging subscribers long distance rates for calls made to Tooele cellular prefixes. In fact, Beehive admitted that it "only allow[ed] access to [Tooele] [c]ellular numbers by the customer dialing 1+801+7 digits and paying for the call as toll" the same as other long distance calls. Beehive argued instead that it was not obligated to provide EAS service with respect to cellular carriers because it had no contracts with cellular companies to provide such services. In a ruling and notice issued on October 10, 1996, the administrative law judge stated that the issues to be resolved would be limited to, in pertinent part, "Beehive Rush Valley Customers' access to and/or charges for calls to prefixes served by wireless telephone providers."

¶ 6 The hearing to address the various issues alleged in the Commission's order to show cause was held on November 12, 1996.⁴ During the hearing, several witnesses testified that they could not call Tooele cellular prefixes without being charged long distance rates, and were forced to dial 1+801+the number before the call would go through. Although there was some evidence presented of overflow periods between approximately 8:30 to 10:30 a.m., and 8:00 to 11:00 p.m., there was also evidence presented that Beehive's policy was to charge long distance rates for calls made to Tooele cellular prefixes regardless of any overflow. For example, in addition to Beehive's previous statements regarding its policy of charging long distance rates to Tooele numbers, Mr. Brothers confirmed a witness's statement that she could not dial a Tooele cellular prefix by simply dialing the 830 prefix plus the number. Mr. Brothers also personally testified that "[he] made the decision that [Beehive was] not going to[,] as a company policy[,] allow calls from competing telephone companies to be made through [Beehive's] system unless [it] had some kind of an agreement with the cellular companies." Beehive also confirms in its brief on this appeal that "some testimony suggested that ... something was blocking the ability of subscribers to dial the cellular prefixes, requiring customers to place the calls as toll calls."

¶ 7 At the conclusion of the hearing, Beehive moved for a continuance in order to prepare additional testimony and respond to the evidence presented. The administrative law judge allotted Beehive three weeks following the hearing to submit post-hearing briefs, but denied Beehive's request for an additional hearing. The administrative law judge also denied Beehive's subsequent written request for additional time. In neither request did Beehive dispute its practice of charging long distance rates for calls made to Tooele cellular prefixes. Indeed, Beehive acknowledged in its petition for reconsideration that the cellular issue was "a matter of law" and stated that it only wanted additional time "to get evidence into the record to support [its] position that [Beehive] ... be permitted to charge ... [its] originating access to the cellular customer from Beehive subscribers."

89 P.3d 136

¶ 8 The administrative law judge issued his report and order on April 10, 1997, ("April 10, 1997 Order") in which he found that, in addition to various quality of service and billing problems, Beehive had been indisputedly imposing toll charges for calls to Tooele cellular prefixes since March of 1996. Accordingly, the administrative law judge found Beehive to be in violation of Utah Code section 54-3-7 and fined Beehive $182,500 pursuant to Utah Code section 54-7-25, $500 for each day Beehive imposed illegal charges. The administrative law judge suspended the sentence, however, "on condition [that Beehive] compl[y] fully with the requirements of the [April 10, 1997 Order]." If Beehive achieved such compliance, the order stated that the suspension would be permanent; otherwise, the suspension would be vacated and the fine would be "immediately due and payable." Beehive moved for reconsideration, which the Commission apparently denied.⁵

¶ 9 Following the April 10, 1997 Order, Beehive made prompt efforts to comply with the administrative law judge's findings with respect to the quality of service issues. However, after receiving "several inquiries and complaints" from Beehive subscribers that they were continuing to be improperly charged for cellular calls in their EAS calling area, on October 13, 1998, the Division filed another order to show cause why the suspended fine should not be vacated. During subsequent hearings, the Division introduced evidence showing that Beehive had continued to charge subscribers long distance rates for calls made to Tooele cellular prefixes from April 1997 to November 1998. Mr. Brothers testified that Beehive continued to impose long distance toll charges for Tooele cellular prefixes because of his erroneous belief that the April 10, 1997 Order was stayed...