Cox Telecom v. State ex rel. Corp. Com'n, 102,392.

• Court: Supreme Court of Oklahoma
• Writing for the Court: Opala
• Citation: 2007 OK 55,164 P.3d 150
• Parties: Application of Southwestern Bell Telephone, L.P. d/b/a SBC Oklahoma for the Classification of Intrastate Retail Telecommunications Services as Basket 4 Services Pursuant to OAC 165:55-5-66(4). COX OKLAHOMA TELECOM, LLC, Intervening Party/Appellant, v. STATE of Oklahoma ex rel. OKLAHOMA CORPORATION COMMISSION and Southwestern Bell Telephone, L.P. d/b/a SBC Oklahoma, Appellees. AARP Oklahoma, Intervening Party/Appellant, v. State of Oklahoma ex rel. Oklahoma Corporation Commission and Southwestern Bell Telephone, L.P. d/b/a SBC Oklahoma, Appellees.
• Docket Number: No. 102,392.,102,392.
• Decision Date: 03 July 2007

164 P.3d 150 2007 OK 55 Application of Southwestern Bell Telephone, L.P. d/b/a SBC Oklahoma for the Classification of Intrastate Retail Telecommunications Services as Basket 4 Services Pursuant to OAC 165:55-5-66(4).
COX OKLAHOMA TELECOM, LLC, Intervening Party/Appellant,
v.
STATE of Oklahoma ex rel. OKLAHOMA CORPORATION COMMISSION and Southwestern Bell Telephone, L.P. d/b/a SBC Oklahoma, Appellees.
AARP Oklahoma, Intervening Party/Appellant,
v.
State of Oklahoma ex rel. Oklahoma Corporation Commission and Southwestern Bell Telephone, L.P. d/b/a SBC Oklahoma, Appellees. No. 102,392. Supreme Court of Oklahoma. July 3, 2007.

[164 P.3d 153]

On Appeal from the Oklahoma Corporation Commission.

¶ 0 Southwestern Bell Telephone, L.P., d/b/a SBC Oklahoma, applied to the Oklahoma Corporation Commission for an order that would reclassify as competitive most of SBC's intrastate retail telecommunications services pursuant to the terms of OAC 165:55-5-66(4). The Oklahoma Corporation Commission, one commissioner dissenting, granted the requested relief as to all but three of such services. Cox Oklahoma Telecom, LLC, appealed in Cause No. 102,392. AARP Oklahoma appealed in Cause No. 102,461. The appeals stand consolidated under surviving Cause No. 102,392, which is retained for this court's disposition by a single opinion.

ORDER AFFIRMED.

Marc Edwards, Jennifer Kirkpatrick, and Heather Hintz, Phillips McFall McCaffrey McVay & Murrah, P.C., Oklahoma City, Oklahoma, for Appellant, Cox Oklahoma Telecom, LLC.

Clint Russell and Mark H. Ramsey, Taylor, Burrage, Foster, Mallett, Downs & Ramsey, Claremore, Oklahoma, for Appellant, AARP Oklahoma.

Mary Marks Jenkins and John W. Gray, Oklahoma City, Oklahoma; Curtis M. Long and Charles R. Willing, Fellers, Snider, Blankenship, Bailey & Tippens, P.C., Tulsa, Oklahoma; and John Paul Walters, Jr., The Walters Law Firm, Edmond, Oklahoma, for Appellee, Southwestern Bell Telephone, LLC d/b/a SBC Oklahoma.

Elizabeth Ryan, Assistant Attorney General, Office of the Oklahoma Attorney General, Oklahoma City, Oklahoma, for Appellee, State of Oklahoma ex rel. Oklahoma Corporation Commission.¹

OPALA, J.

¶ 1 The dispositive questions presented for review are: (1) Did the Corporation Commission err in treating this proceeding as legislative rather than judicial? and (2) Is the order under review sustained by law and by substantial evidence? We answer the first question in the negative and the second in the affirmative.

I ANATOMY OF THE PROCEEDINGS

¶ 2 Southwestern Bell Telephone, L.P. d/b/a SBC Oklahoma ("SBC" or "SBC Oklahoma")² is an Incumbent Local Exchange Company (ILEC)³ that provides telecommunications services in Oklahoma. It is regulated by the Oklahoma Corporation Commission (the "Commission") under an alternative regulatory scheme called the Oklahoma Plan.⁴ The Oklahoma Plan gives SBC the ability to seek some measure of freedom from regulatory oversight by the Commission depending on the level of competition present in the Oklahoma telecommunications market-place.

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One of its provisions, OAC 165:55-5-66(4), permits a regulated telecommunications service to be reclassified as competitive if the Commission determines that the service is subject to effective competition and that functionally equivalent and substitute services are available.⁵ If found to be competitive, a service is placed into what is figuratively called Basket 4. Price changes of Basket 4 services go into effect immediately and without first having to receive the Commission's approval. SBC applied to the Commission on 21 January 2005 for a competitive reclassification of most of its intrastate retail telecommunications services. Cox Oklahoma Telecom, LLC ("Cox") and AARP Oklahoma ("AARP") intervened to oppose SBC's application.

¶ 3 After receiving prefiled, written testimony from numerous witnesses for each party, the Commission in June 2005 held a two-day hearing on SBC's application. With one commissioner dissenting, the Commission issued its Final Order (the "Order") on 28 July 2005, reclassifying as competitive all but three of SBC's intrastate retail telecommunications services. The Commission also decided a number of collateral issues. The Order did not alter any of SBC's existing intrastate retail rates nor did it affect any of SBC's wholesale services or rates.

¶ 4 Cox appealed from the Order in Cause No. 102,392; AARP filed an appeal in Cause No. 102,461. The separate appeals were consolidated on 14 September 2005 under surviving Cause No. 102,392, which was retained for this court's disposition by a single opinion.

II STANDING TO APPEAL

¶ 5 SBC and the Commission ("appellees") seek dismissal of Cox's appeal for lack of standing. Standing refers to a person's legal right to seek relief in a judicial forum.⁶ It is a threshold question that must be decided before any other issue may be addressed.⁷ Standing to appeal from an order of the Commission is governed by Article 9, Section 20 of the Oklahoma Constitution,⁸ which provides that an appeal may be taken by "any party affected" or "any person deeming himself aggrieved" by an action of the Commission affecting the rates, charges, services, practices, rules or regulations of a public service corporation.⁹ The purpose of the standing requirement is to ensure that courts address actual controversies between parties who have sufficient adverse interests.¹⁰ The standing doctrine should never be applied mechanistically to bar from the courthouse those who are truly aggrieved.¹¹

¶ 6 Appellees argue that Cox does not have standing to press for corrective relief in this cause because nothing in the Order directly harms Cox's pecuniary interest. We are told by appellees that Cox cannot be

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injured by the Order because the Order authorizes only legitimate competition in the Oklahoma telecommunications market. According to appellees, the injury Cox fears — anti-competitive or predatory behavior by SBC—is speculative and contingent on future events. It assumes not that injury will result from SBC's adherence to the Order but rather that it will result from conduct that violates the Order. Cox argues in response that the Order causes it injury because it unlawfully lifts regulatory oversight of SBC, the effect of which will be increased competition from SBC that will directly, immediately, and substantially harm Cox's pecuniary interest.

¶ 7 We are persuaded that Cox is a proper party to seek corrective relief from the Commission's Order. We have on several occasions held that a person is aggrieved by competition resulting from an unlawful action of a government agency.¹² Competitive harm or the threat of competitive harm from the lifting of regulatory oversight has also been held to be a sufficiently concrete injury to confer standing by the Court of Appeals for the District of Columbia Circuit, which has been faced many times with appellate complaints of injurious actions by federal agencies.¹³

¶ 8 The Order constitutes a departure from the manner in which SBC has been regulated under the Oklahoma Plan. It would give SBC a high degree of pricing freedom based upon the Commission's finding that a new day has dawned in the telecommunications industry in this state—a day in which SBC faces sufficient competition to constrain it from engaging in anti-competitive or predatory pricing. Cox vehemently disagrees with this finding. It argues that competitors in Oklahoma have barely even begun to challenge SBC's market hegemony, making the pricing freedom granted to SBC by the Order premature and a threat to the economic viability of SBC's competitors. We declare this potential for economic harm that results from a diminution in regulatory oversight by the Commission gives Cox standing to press for relief in this appeal.¹⁴

164 P.3d 156

III STANDARD OF REVIEW

¶ 9 The power to review Commission decisions is vested in this court by the Oklahoma Constitution, Art. 9 § 20.¹⁵ That provision fashions two standards of review—a de novo standard for appeals based on alleged violations of constitutional rights and a more deferential standard for all other appeals.¹⁶ Today's pronouncement employs both standards.¹⁷ Because Commission decisions often involve complex issues of economics, accounting, engineering, and other special fields of knowledge, a presumption of correctness accompanies the Commission's findings in matters it frequently adjudicates and in which it possesses expertise.¹⁸

IV THE COMMISSION CORRECTLY TREATED THIS PROCEEDING AS LEGISLATIVE IN NATURE

¶ 10 The Commission ruled that SBC's application should be treated as a legislative matter. Appellants argue that this decision constitutes reversible error. Initially, we note that neither Cox nor AARP ("appellants") objected below to treating this proceeding as legislative. This omission would ordinarily preclude our review of appellants' contention,¹⁹ but the rule has an exception that permits review of an alleged deprivation of due process of law despite failure to preserve it below.²⁰ While appellants do not use

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the term due process to describe their attack, they claim that the Commission's decision to treat this proceeding as legislative rather than judicial resulted in a hearing that was fundamentally unfair. The flaws alleged to inhere in the hearing include lobbying, ex parte contacts, and a failure of the Commission to follow its own rules. The gist of these allegations is that the legislative designation of this proceeding led to a violation of appellants' right to receive the benefit of due process. We will therefore consider this proposition of error despite appellants' failure to object below.

¶ 11 Both appellants and appellees rely on the landmark decision by the United States Supreme Court in Prentis v. Atlantic Coast Line Company,²¹ which defined a judicial inquiry as one which "investigates, declares, and enforces liabilities as they stand on present and...