Complaint of Rovas against Sbc

• Court: Michigan Supreme Court
• Writing for the Court: Young
• Citation: Complaint of Rovas against Sbc, 754 N.W.2d 259, 482 Mich. 90 (Mich. 2008)
• Decision Date: 23 July 2008
• Docket Number: Docket No. 134500.,Docket No. 134493.,Calendar No. 7.
• Parties: In re COMPLAINT OF ROVAS AGAINST SBC MICHIGAN. SBC Michigan, Plaintiff-Appellant, v. Public Service Commission, Defendant-Appellee. SBC Michigan, Plaintiff-Appellee, v. Public Service Commission, Defendant-Appellant.

754 N.W.2d 259

482 Mich. 90

In re COMPLAINT OF ROVAS AGAINST SBC MICHIGAN.

SBC Michigan, Plaintiff-Appellant, v. Public Service Commission, Defendant-Appellee.

SBC Michigan, Plaintiff-Appellee, v. Public Service Commission, Defendant-Appellant.

Docket No. 134493.

Docket No. 134500.

Calendar No. 7.

Supreme Court of Michigan.

Argued March 5, 2008.

Decided July 23, 2008.

Craig A. Anderson, Lisa M. Bruno, and Dickinson Wright P.L.L.C. (by Peter H.

Ellsworth, Jeffery V. Stuckey, Phillip J. DeRosier, and Trent B. Collier), Detroit, Lansing, for SBC Michigan.

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

Patrick J. Wright, Midland, for amici curiae the Mackinac Center for Public Policy.

Miller, Canfield, Paddock and Stone, P.L.C. (by Sherri A. Wellman and Michael C. Rampe), Lansing, for amici curiae the Telecommunications Association of Michigan.

Stephen J. Gobbo and Kimberly A. Breitmeyer, Lansing, for amici curiae the State Bar of Michigan Administrative Law Section.

Opinion

YOUNG, J.

This case concerns judicial review of an administrative agency's interpretation of a statute. This Court has not always been precise in articulating the proper standard for reviewing such interpretations. However, in accordance with longstanding Michigan precedent and basic separation of powers principles, we hold and reaffirm that an agency's interpretation of a statute is entitled to "respectful consideration," but courts may not abdicate their judicial responsibility to interpret statutes by giving unfettered deference to an agency's interpretation. Courts must respect legislative decisions and interpret statutes according to their plain language. An agency's interpretation, to the extent it is persuasive, can aid in that endeavor.

In this case, the Court of Appeals did not properly review the agency's interpretation of the statute. Despite having understandable reservations about the agency's interpretation, the Court affirmed the agency's interpretation merely because it was "plausible." However, the plain language of the statute does not support the agency's interpretation. Therefore, we reverse the Court of Appeals decision to uphold the agency's construction of the statute. Under the proper interpretation of the statute, SBC Michigan (SBC)¹ did not violate the statute as the Public Service Commission (PSC) had erroneously concluded. However, we agree with and affirm the conclusion of the Court of Appeals that the PSC had no jurisdiction over wiring inside a customer's home. Thus, we remand this case to the PSC with the instruction that it must modify its August 1, 2005, order to eliminate any PSC regulation of "inside wiring."

Accordingly, the Court of Appeals judgment is reversed in part and affirmed in part and the case is remanded to the PSC for further proceedings consistent with this opinion.

FACTS AND PROCEDURAL HISTORY

This case began in April 2001, when William J. and Sandra M. Rovas, SBC customers, called to report an interruption in their service. SBC sent a technician, who checked the wiring outside their home and erroneously determined that the problem was inside the customers' home. Because the technician believed that the problem was inside the home, he left a note informing the customers that they would be charged $71 for the service call. Eventually, SBC realized the error and reversed the charge, but not before sending the customers a bill for the $71.

Despite the fact that SBC reversed the erroneously sent bill, the customers filed a complaint with the PSC alleging, inter alia, a violation of § 2502(l)(a)² of the Michigan Telecommunications Act, MCL 484.2101 et seq.³ The PSC agreed with the customers and found that SBC's statements to the customers that (1) the problem was inside their home and (2) they owed SBC $71 for the service call were both "false," and therefore, constituted violations of § 2502(1)(a). For erroneously sending a retracted $71 bill, the PSC fined SBC $15,000 for violating § 2502(l)(a).⁴

The Court of Appeals affirmed the PSC decision in an unpublished opinion per curiam, noting, however, that given the context of the term "false" in the statute, "it is plausible this provision is not intended to proscribe a statement that is simply not true or correct, but is only intended to proscribe those statements tending to deceive or mislead."⁵ Nonetheless, the Court of Appeals affirmed the PSC because the panel believed it was "charged with giving great deference to the PSC's construction of a statute which the Legislature has required the PSC to enforce, and therefore the mere establishment of an alternative interpretation of a statute to that given by the PSC will not satisfy [SBC's] burden of proving the PSC's interpretation was unlawful or unreasonable."⁶ However, the panel was concerned that a portion of the PSC order implementing its interpretation was "ambiguous" and remanded for clarification. Specifically, the panel and SBC were concerned that the order required SBC to enter each consumer's home to verify that the problem originated inside the house. This Court denied SBC's interlocutory application for leave to appeal.⁷

On remand, the PSC clarified its order by noting that "SBC need not enter a customer's premises every time that SBC is called upon to make a service trip";⁸ however, SBC may not charge for services "if those services are reasonably necessary to diagnose problems attributable to its own facilities or exclude those facilities as a possible cause of service disruptions."⁹

In a published opinion, the Court of Appeals affirmed in part and remanded to require the PSC to issue a modified order.¹⁰ In doing so, the panel relied on federal law and held that "inside wiring services" (services for problems with the wiring inside the customer's home) were not subject to regulation by the PSC because such problems are not within the PSC's authority. Thus, the panel held that the PSC could not regulate "correct determination[s] by SBC excluding its facilities as the cause of service disruption" because a correct determination that the problem originated inside the customer's home necessarily involves "inside wiring."¹¹ Both the PSC and SBC have appealed to this Court, and this Court granted both applications.¹²

STANDARD OF REVIEW

As a general proposition, this Court reviews de novo questions of law, such as the proper interpretation of a statute.¹³ However, the primary issue in this case is the proper standard of review of an administrative agency's construction of a statute. That standard of review is discussed below.

ANALYSIS

This case implicates the powers, and the boundaries of the powers, of all three branches: the Legislature; the judiciary; and administrative agencies, which are part of the executive branch.¹⁴ Thus, separation of powers principles will aid in the analysis of the proper consideration due an administrative agency's interpretation of a statute.

The people of the state of Michigan have divided the powers of their government "into three branches: legislative, executive and judicial."¹⁵ Furthermore, "[n]o person exercising the powers of one branch shall exercise powers properly belonging to another branch except as expressly provided in this constitution."¹⁶

"The legislative power of the State of Michigan is vested in a senate and a house of representatives."¹⁷ Simply put, legislative power is the power to make laws.¹⁸ In accordance with the constitution's separation of powers, this Court "cannot revise, amend, deconstruct, or ignore [the Legislature's] product and still be true to our responsibilities that give our branch only the judicial power."¹⁹ While administrative agencies have what have been described as "quasi-legislative" powers, such as rulemaking authority, these agencies cannot exercise legislative power by creating law or changing the laws enacted by the Legislature.²⁰

Since the time of Marbury v. Madison,²¹ interpreting the law has been one of the defining aspects of judicial power. "Although we may not usurp the lawmaking function of the legislature, the proper construction of a statute is a judicial function, and we are required to discover the legislative intent."²² Administrative agencies exercise what have been described as "quasi-judicial" powers.²³ However, such power is limited and is not an exercise of constitutional "judicial power." The primary "judicial" function exercised by administrative agencies is confined to conducting contested cases, like the one at issue here. These administrative contested cases resemble trials. Constitutionally and statutorily, these administrative fact finding exercises are entitled to a degree of deference defined by statute and our constitution.²⁴ However, fact finding in an administrative contested case, much like in a trial before a circuit court, is a far different endeavor than construing a statute.

I. REVIEW OF AN ADMINISTRATIVE AGENCY'S INTERPRETATION OF A STATUTE

With these separation of powers principles in mind, we now turn to the proper standard, under Michigan law, for reviewing an agency's construction of a statute.

A. MICHIGAN JURISPRUDENCE

Unlike the United States Constitution, the Michigan Constitution specifically recognizes administrative agencies. Furthermore, the constitution explicitly provides for judicial review of administrative decisions:

All final decisions, findings, rulings and orders of any administrative officer or agency existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights or licenses, shall be subject to direct review by the courts as provided by law. This review shall include, as a minimum, the determination whether such final decisions, findings, rulings and orders are authorized by law; and, in cases in which a hearing is...