Discount Cellular, Inc. v. Pub. Util. Comm.

• Decision Date: 24 January 2007
• Docket Number: No. 2005-2370.,No. 2005-2209.,No. 2005-2368.,2005-2209.,2005-2368.,2005-2370.
• Citation: 859 N.E.2d 957,112 Ohio St.3d 360,2006 Ohio 53
• Parties: DISCOUNT CELLULAR, INC., et al., Appellants, v. PUBLIC UTILITIES COMMISSION OF OHIO et al., Appellees.
• Court: Ohio Supreme Court

859 N.E.2d 957

112 Ohio St.3d 360

2007-Ohio-53

DISCOUNT CELLULAR, INC., et al., Appellants, v. PUBLIC UTILITIES COMMISSION OF OHIO et al., Appellees.

No. 2005-2209.

No. 2005-2368.

No. 2005-2370.

Supreme Court of Ohio.

Submitted October 3, 2006.

Decided January 24, 2007.

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Randy J. Hart, Mark Griffin, and Carla Tricarichi, Cleveland, for appellants.

Marc Dann, Attorney General, Duane Luckey, Senior Deputy Attorney General, and Thomas W. McNamee, Assistant Attorney General, for appellee Public Utilities Commission of Ohio.

Porter, Wright, Morris & Arthur, Kathleen M. Trafford, Columbus, and Hugh E. McKay, Cleveland; Kirkland & Ellis, L.L.P., Stephen R. Patton, Chicago, IL, and Robert R. Gasaway, Washington, DC, for intervening appellee Verizon Wireless.

Calfee, Halter & Griswold, L.L.P., Mark I. Wallach, James F. Lang, and Michael T. Mulcahy, Cleveland, for intervening appellees Ameritech Mobile Communications, L.L.C., and Cincinnati SMSA Limited Partnership.

LUNDBERG STRATTON, J.

Background

{¶ 1} These are appeals as of right by appellants, Discount Cellular, Inc. ("Discount Cellular" or "Discount"), Richards Ltd., Inc., d.b.a. Advanced Cellular and Paging Services ("Advanced Cellular"), Intermessage Wireless Associates, Ltd. ("Intermessage Wireless"), and Jeff Rand Corporation, d.b.a. Wireless Outlet ("Wireless Outlet"), from orders of the Public Utilities Commission of Ohio ("commission" or "PUCO") in case Nos. 04-236-RC-CSS, 05-190-RC-CSS, 05-811-RC-CSS, and 05-812-RC-CSS. Ameritech Mobile Communications, L.L.C., with Cincinnati SMSA Limited Partnership ("Ameritech" or "intervenors"), and Verizon Wireless ("Verizon" or "intervenors") have intervened as appellees.

{¶ 2} Appellants are cellular telephone service resellers. As such, appellants purchase cellular service on a wholesale basis, rebrand the service, and market it to the general public on a retail basis. Intervenors are engaged in business as wholesale cellular telephone service providers.

{¶ 3} The backdrop for these appeals is R.C. Chapter 4927, which the General Assembly enacted in 1988 to give the commission broad authority to implement alternative regulatory requirements and other deregulatory actions for the telecommunications industry in Ohio. Am.Sub.H.B. No. 563, 142 Ohio Laws, Part III, 4369. Specific to this matter, R.C. 4927.03(A)(1), as enacted,¹ provided that the commission, "upon its own initiative or the application of a telephone company * * *, may, by order, exempt any telephone company or companies, as to any public telecommunications service except basic local exchange service, from any provision of Chapter 4505. or 4909. of the Revised Code or any rule or order issued under those chapters, or establish alternative regulatory requirements * * *; provided the commission finds that any such measure is in the public interest and either * * * [t]he telephone company or companies are subject to competition with respect to such public telecommunications service * * * [or][t]he customers of such public telecommunications service have reasonably available alternatives."

{¶ 4} In 1993, the commission exercised its alternative regulatory authority and issued guidelines for the entire telecommunications industry. See In the Matter of the Commission Investigation into the Implementation of Sections 4927.01 Through 4927.05, Revised Code, as They Relate to Competitive Telecommunication Services, case No. 89-563-TP-COI, 1993 WL 500056 (Oct. 22, 1993) (the "563 Guidelines"). In the 563 Guidelines, the commission determined that further relaxation of its regulatory oversight of the cellular telephone market was warranted. The commission found cellular telephone service to be a "competitive telecommunication service" but did not believe that complete deregulation was justified. To that end, the commission decided to maintain certain regulatory requirements concerning the cellular wholesale industry in order to protect the public from anticompetitive conduct by wholesale providers of cellular telephone service.

{¶ 5} Under the 563 Guidelines, the commission required that wholesale providers (1) provide access to cellular service on a nondiscriminatory basis to all cellular service resellers, affiliated and nonaffiliated alike, (2) maintain separate wholesale and retail operations, (3) maintain detailed written records of transactions between themselves and their affiliated cellular service resellers, and (4) maintain comprehensive records of all inquiries from potential resale customers and of transactions between the wholesalers and unaffiliated cellular service resellers. The PUCO also made it clear that R.C. 4905.26 complaint proceedings remained available to address regulatory violations committed by cellular telephone service providers.

{¶ 6} In 1999, the commission issued an order exempting cellular service providers from a number of existing regulatory requirements. In the Matter of the Commission Investigation into the Alternative Regulatory Treatment of Commercial Mobile Radio Service Providers, case No. 99-1700-TP-COI (Dec. 16, 1999) (the "1700 Order").² Specifically, the commission exempted cellular wholesale service providers from R.C. 4905.26 complaint proceedings. The commission noted that future complaints alleging anticompetitive and discriminatory conduct by cellular service providers could be brought before the Federal Communications Commission ("FCC"). The commission also exempted cellular service providers from R.C. 4905.33 (rebates, special rates, and free service prohibited), 4905.34 (exceptions), and 4905.35 (discriminatory conduct prohibited). The commission further made other temporary exemptions that had been granted in the 563 Guidelines permanent.

{¶ 7} On February 24, 2004, Discount Cellular filed a complaint pursuant to R.C. 4905.26 alleging that Ameritech had discriminated against Discount when it (1) failed to maintain separate wholesale and retail operations, (2) cross-subsidized its retail operations with profits generated through its wholesale operations, and (3) failed to provide Discount with cellular service at the same rates, terms, and conditions made available to Ameritech's affiliated reseller. Discount claimed that Ameritech's actions violated R.C. 4905.10, 4905.22, 4905.32, 4905.33, 4905.35, 4905.54, and 4909.18 and certain commission orders, including the 563 Guidelines.³

{¶ 8} On August 3, 2005, the commission granted Ameritech's motion to dismiss Discount's complaint. The commission's dismissal was based on its determination in the 1700 Order that it would no longer consider R.C. 4905.26 complaints against wholesale cellular service providers like Ameritech. The commission explained that it had exempted wholesale providers in the 1700 Order from the regulatory requirements that formed the basis of Discount's complaint, and it advised Discount to pursue its claims of anticompetitive conduct against Ameritech at the FCC.

{¶ 9} Discount filed a timely application for rehearing. On September 28, 2005, the commission denied Discount's application, again finding that it had relinquished jurisdiction over R.C. 4905.26 complaints against wholesale cellular service providers in the 1700 Order. The commission additionally noted, for the first time, that R.C. 4905.26 "necessitates a finding by the Commission that there are reasonable grounds for the complaint, as a prerequisite to proceeding with such complaint. In this case, the Commission never made a finding that reasonable grounds existed for Discount's complaint."

{¶ 10} Advanced Cellular, Intermessage Wireless, and Wireless Outlet also filed complaints against several wholesale cellular service providers, including intervenors, Ameritech and Verizon. These complaints made allegations of discriminatory and anticompetitive conduct similar to those alleged in Discount Cellular's complaint. On October 12, 2005, the commission dismissed the complaints on the authority of the order and rehearing entry in the Discount Cellular case. On December 7, 2005, the commission denied applications for rehearing.

{¶ 11} Discount Cellular initiated the appeal in case No. 2005-2209 by filing a notice of appeal on November 22, 2005, following the rehearing entry of the commission dated September 28, 2005. On December 19, 2005, Advanced Cellular, Intermessage Wireless, and Wireless Outlet initiated the appeals in case Nos. 2005-2368, 2005-2369, and 2005-2370, following the commission's rehearing entry on December 7, 2005.

{¶ 12} On January 26, 2006, we granted a motion to consolidate all four appeals for briefing, oral argument, and final decision. Appellants' appeals as of right are now before this court.

Standard of Review

{¶ 13} "R.C. 4903.13 provides that a PUCO order shall be reversed, vacated, or modified by this court only when, upon consideration of the record, the court finds the order to be unlawful or unreasonable." Constellation NewEnergy, Inc. v. Pub. Util. Comm., 104 Ohio St.3d 530, 2004-Ohio-6767, 820 N.E.2d 885, ¶ 50. We will not reverse or modify a PUCO decision as to questions of fact when the record contains sufficient probative evidence to show that the commission's decision was not manifestly against the weight of the evidence and was not so clearly unsupported by the record as to show misapprehension, mistake, or willful disregard of duty. Monongahela Power Co. v. Pub. Util Comm., 104 Ohio St.3d 571, 2004-Ohio-6896, 820 N.E.2d 921, ¶ 29. The appellant bears the burden of demonstrating that the PUCO's decision is against the manifest weight of the evidence or is clearly unsupported by the record. Id.

{¶ 14} Although we have "complete and independent power of review as to all questions of law" in appeals from the PUCO, Ohio Edison Co. v. Pub. Util. Comm. (1997), 78 Ohio St.3d 466, 469, 678 N.E.2d 922, we may rely on the expertise of a state agency in interpreting a law where ...