IN RE MCI TELECOMMUNICATIONS CORP.
| Decision Date | 22 June 2000 |
| Docket Number | Docket No. 211814. |
| Citation | 240 Mich. App. 292,612 N.W.2d 826 |
| Parties | In the Matter of the application and the complaint of MCI TELECOMMUNICATIONS CORPORATION against Michigan Bell Telephone Company d/b/a Ameritech Michigan for purported improper intraLATA PIC rejections and improper practices during three-way calls for verification of PIC changes. Ameritech Michigan, Appellant/Cross-Appellee, v. Michigan Public Service Commission, Appellee/Cross-Appellee, and MCI Telecommunications, Appellee/Cross-Appellant. |
| Court | Court of Appeal of Michigan — District of US |
Dickinson Wright PLLC (by Joseph A. Fink, John M. Dempsey, Jeffery V. Stuckey, and Jennifer L. Frye), Lansing, for Ameritech Michigan.
Dykema Gossett PLLC (by Robert J. Franzinger, Albert Ernst, Lori Silsbury, and Thomas S. Bishoff), Lansing (Thomas F. O'Neil, III and Adam H. Charnes, of Counsel), Washington, DC, for MCI Telecommunications Corporation.
Jennifer M. Granholm, Attorney General, Thomas L. Casey, Solicitor General, and David A. Voges and Patricia Barone, Assistant Attorneys General, for the Public Service Commission.
Before: HOEKSTRA, P.J., and McDONALD and METER, JJ.
Ameritech Michigan appeals as of right from an order of the Michigan Public Service Commission (MPSC), in which the MPSC ruled that Ameritech had violated the terms of an earlier MPSC order. MCI Telecommunications Corporation cross appeals, challenging the MPSC's denial of MCI's request for compensatory damages allegedly resulting from Ameritech's violation of the earlier order. We affirm in part and vacate in part.
This case involves Ameritech's use of a voluntary "PIC protection" program. Such programs are designed to prevent the practice known as "slamming," whereby a customer's preexisting choice of a PIC,1 or telecommunications service provider, is changed without the customer's consent. In 1992, in order to protect against "slamming," the Federal Communications Commission (FCC) adopted four PIC change verification procedures for use in the interstate long distance market. Specifically, the FCC provided, in 47 CFR 64.1100 and 47 CFR 64.1150, that a PIC change could be verified by (1) a written letter of agency or authorization (LOA) from the customer granting a provider authority to request the PIC change on the customer's behalf; (2) third-party verification (TPV), in which a qualified and independent third party obtains the customer's oral authorization for the PIC change; (3) electronic confirmation from the customer through the use of a toll-free telephone number; or (4) the customer's return of a prepaid postcard that is sent to the customer in an information package regarding the PIC change.2
Ameritech decided to offer a voluntary PIC protection program that had a more stringent verification requirement than those contained in the FCC procedures. The program allowed no change in the customer's PIC choice unless and until the customer authorized the change by contacting Ameritech directly. In December 1995, Ameritech sent a bill insert to its customers urging them to sign up for the voluntary PIC protection program. The bill insert was sent shortly before the conversion to a new dialing system for intraLATA calls that served to foster competition in the intraLATA market.
LATAs (Local Access Transport Areas) are geographic regions that roughly correspond to telephone area code regions. In the telecommunications industry, long distance telephone calls between LATAs are known as "interLATA" calls, and local long distance calls sent and received within a single LATA are known as "intraLATA" calls. For many years, local exchange carriers such as Ameritech exclusively serviced all intraLATA calls made by 1+ dialing (i.e., by simply dialing a 1 before the number to be called). In 1994, however, the MPSC ordered a conversion to 1+ dialing parity, meaning that whenever 1+ dialing is used for an intraLATA call, the call is now served by a provider presubscribed by the customer (i.e., the call is not immediately served by a local carrier such as Ameritech). Ameritech sent its PIC protection bill insert just before the implementation of 1+ dialing parity for intraLATA calls.
Sprint Communications Company filed a complaint against Ameritech with the MPSC, alleging that Ameritech's bill insert was misleading and anticompetitive in violation of the Michigan Telecommunications Act (MTA), M.C.L. § 484.2101 et seq.; MSA 22.1469(101) et seq. The proceedings on the complaint were docketed by the MPSC as Case No. U-11038.
On August 1, 1996, the MPSC issued an opinion and order in Case No. U-11038, finding that Ameritech's bill insert was misleading, deceptive, and timed to impede the transition to intraLATA presubscription competition. Accordingly, the MPSC concluded that the bill insert violated the MTA and the MPSC's previous orders requiring intraLATA dialing parity competition. The MPSC also reasoned that Ameritech's PIC protection program, as advertised to Ameritech's intraLATA customers through a misleading and deceptive bill insert, was anticompetitive in effect. The MPSC stressed, however, that aside from the effect of the deceptive promotion, the MPSC was not finding anything inappropriate about Ameritech's PIC protection program in and of itself.3
As a result of Ameritech's misconduct, the MPSC ordered the following remedies:
The instant case concerns Ameritech's compliance with paragraphs E and F above.4
In October 1997, MCI filed a two-count complaint with the MPSC, alleging that (1) since April 1, 1997, when the six-month moratorium imposed by the MPSC on the application of Ameritech's PIC protection program to intraLATA customers ended, Ameritech refused to process over 20,000 intraLATA PIC change requests submitted by MCI, despite the fact that all these requests were properly verified by either TPV or a LOA; and (2) Ameritech's service representatives had been engaging in improper conduct during three-way PIC change conference calls, such as trying to persuade customers not to change intraLATA carriers, refusing to participate in three-way calls, and using confidential customer data to try to sell customers additional Ameritech services and features. In addition to other relief, MCI sought to recover compensatory damages and litigation expenses, including attorney fees.
Ameritech contended that its refusal to accept verifications by TPV or a LOA as sufficient for intraLATA PIC changes on its customers' accounts was not a violation of the MPSC's August 1, 1996, order in Case No. U-11038, because the MPSC had allowed Ameritech, after the six-month moratorium, to apply its own PIC protection plan and to refuse verifications by TPV or a LOA. Ameritech further contended that (1) it had not engaged in any misconduct during three-way conference calls and (2) the use of confidential customer information and attempts to sell other Ameritech products during the calls, even if these activities had occurred, would not have violated the order in Case No. U-11038.
In a May 11, 1998, opinion and order, the MPSC adopted the hearing officer's conclusion that Ameritech had violated the MPSC's order in Case No. U-11038. The MPSC found that Ameritech (1) improperly refused to implement intraLATA changes that were verified only by TPV or a LOA for customers with PIC protection, and (2) repeatedly engaged in improper conduct during three-way conference calls. The MPSC ordered Ameritech to cease and desist its various types of violations, but declined to fine Ameritech for the past violations. The MPSC stated that it was persuaded that Ameritech's misinterpretation of the order in Case No. U-11038 constituted a mitigating circumstance.
With regard to MCI's claim for compensatory damages for lost profits, the MPSC ruled that MCI's proofs were too speculative to support any award for lost profits. In particular, the MPSC noted defects in MCI's calculation of expenses, number of lost customers, and lost minutes of usage. The MPSC did, however, award attorney fees under § 601 of the MTA, which allows the MPSC to order "remedies and penalties" for those who have suffered "economic loss." See M.C.L. § 484.2601; MSA 22.1469(601).
Ameritech first argues that the MPSC erred in concluding that Ameritech violated the order in Case No. U-11038 by failing to implement PIC change orders verified only by TPV or a LOA for customers enrolled in Ameritech's PIC protection...
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