Mountain States Tel. & Tel. Co. v. Arizona Corp. Com'n

• Court: Arizona Supreme Court
• Writing for the Court: FELDMAN; GORDON; ROBERT J. CORCORAN; CAMERON; FELDMAN; GORDON, C.J., CAMERON
• Citation: Mountain States Tel. & Tel. Co. v. Arizona Corp. Com'n, 773 P.2d 455, 160 Ariz. 350, 28 Ariz.Adv.Rep. 3 (Ariz. 1989)
• Decision Date: 14 February 1989
• Docket Number: No. CV-88-0330-SA,CV-88-0330-SA
• Parties: , 57 USLW 2505 The MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, a Colorado Corporation, Petitioner, v. ARIZONA CORPORATION COMMISSION and Renz D. Jennings, Marcia Weeks, and Dale H. Morgan, as members of the Arizona Corporation Commission, Respondents.

Page 455

773 P.2d 455

160 Ariz. 350, 57 USLW 2505

The MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, a Colorado Corporation, Petitioner, v. ARIZONA CORPORATION COMMISSION and Renz D. Jennings, Marcia Weeks, and Dale H. Morgan, as members of the Arizona Corporation Commission, Respondents.

No. CV-88-0330-SA.

Supreme Court of Arizona.

Feb. 14, 1989.

Supplemental Opinion June 1, 1989.

Lynwood J. Evans and Fennemore Craig, P.C. by Calvin H. Udall, Nancy L. Rowen, Phoenix, for petitioner.

Meyer, Hendricks, Victor, Osborn & Maledon, P.A. by Donald M. Peters, Shane R. Swindle, Phoenix, for intervenors/co-petitioners.

Arizona Corp. Com'n by Elizabeth A. Kushibab, Steven J. Glaser, Paul A. Bullis, Phoenix, for respondents.

FELDMAN, Vice Chief Justice.

Mountain States Telephone and Telegraph Company (Mountain Bell) brought this original special action proceeding ¹ to challenge an order of the Arizona Corporation Commission (Commission). Mountain Bell, a public utility providing telephone service, and several "ScoopLine" providers (the providers) allege that the order both exceeds the Commission's power to regulate Mountain Bell's service and is an impermissible burden on protected speech. Because the issues implicate the powers of the Commission ² and involve fundamental rights guaranteed by both the Arizona and federal constitutions, we accepted jurisdiction and stayed the Commission's order. See Rules 1(a) and 7(a), Ariz.R.P.Spec.Act., 17B A.R.S. ³ We have jurisdiction under Ariz. Const. art. 6, § 5(1) and Rule 1.

FACTS

ScoopLines are an information service carried over Mountain Bell's telephone lines. ScoopLines provide customers with access to a "dial-a-message network," enabling a customer to obtain information, messages, or entertainment by calling a provider who offers the specific message. The customer obtains the desired message by calling the appropriate provider's telephone number on the ScoopLine, a service with a "976" prefix. Typically, providers make available sports information, weather reports, commercial information (such as houses for sale, apartments to rent), prayers, and a host of other services including, inevitably, sexually explicit messages. ⁴ The information provider pays Mountain Bell for the 976 line to carry its messages, sets the price for the calls it receives from customers, determines the messages' content, and advertises its number. Mountain Bell then charges its customers when a call is placed from their line to a particular ScoopLine, collects the provider's charge on its regular billing to the customer, subtracts its share, and remits the proceeds to the information provider.

The number of ScoopLine providers has increased dramatically since 1985, when twenty-five providers first signed on. By November 1987, there were 156 information providers. Customers placed over four million ScoopLine calls in 1987 and incurred charges of over $13 million. Mountain Bell's share was $2 million.

This burgeoning new industry, however, has not been problem-free. The Commission received at least 618 customer complaints against ScoopLines. Over half of these complaints dealt with "dial-a-porn" operations and are irrelevant to the case before us. Other customer complaints included unexplained or unauthorized charges, Mountain Bell's imposition of charges for blocking access from a customer's line to the ScoopLine prefix, and Mountain Bell's alleged inconsistent and improper treatment of customers who had problems or complaints about ScoopLine services.

Mountain Bell, the Arizona Legislature, and the Commission all responded to these problems. Mountain Bell adopted new policies. On January 14, 1988, it agreed to create a different prefix, available only to those who subscribed in advance, for ScoopLines harmful to "Mountain Bell's reputation." Petition for Special Action at 7. This policy presumably refers to dial-a-porn services. Mountain Bell also offered free blocking ⁵ of ScoopLines to customers who requested it, agreed to waive charges for alleged unauthorized ScoopLine calls, and undertook to establish a centralized system for handling ScoopLine complaints.

The legislature enacted A.R.S. § 13-2920. ⁶ This statute requires providers to begin each ScoopLine call with a free-of-charge statement of the price and billing method. It also requires providers to pay blocking charges and allows customers a one-time bill adjustment for unauthorized calls. In addition, customers can only obtain dial-a-porn service by presubscription. The legislature also passed A.R.S. § 13-3512, which prohibits information providers from commercially offering obscene or indecent telephone communications to minors.

The Commission responded to the complaints after holding public hearings in February and March of 1988. On June 30, 1988, two months after the legislature had acted, the Commission issued its order as part of Decision No. 56039. Evidently dissatisfied with Mountain Bell's policy changes, the Commission ordered Mountain Bell to implement universal blocking of all ScoopLines and to propose a presubscription plan for the Commission's approval. The Commission ordered compliance within forty-five days. ⁷

In early July, Mountain Bell moved for rehearing and a stay of the order. The Commission denied these motions by failing to act on them. See A.R.S. § 40-253(A). Mountain Bell filed this special action on July 29, 1988. We granted Mountain Bell's request for a stay of the Commission's order.

Several information providers moved to intervene and join Mountain Bell as petitioners in this original proceeding. We turn first to that motion.

INTERVENTION

The information providers here use Mountain Bell's ScoopLine service. Edwin A. Phillips provides weather information; John Hopkins operates two ScoopLines to provide rental home information; Pat McCullough was about to begin a ScoopLine service providing information on used cars for sale, but the Commission's order allegedly deterred him from doing so.

Rule 2(b) expressly allows for intervention. This rule refers to Rule 24, Ariz.R.Civ.P., 16 A.R.S., which provides for intervention "when the applicant claims an interest ... and ... the disposition of the action may, as a practical matter, impair or impede [the intervenor's] ability to protect that interest." Rule 24(a), Ariz.R.Civ.P., 16 A.R.S. ⁸ These providers operate ScoopLine services, and the Commission's order regulates that service. Certainly, the Commission's presubscription requirement affects and may impair or impede the providers' businesses.

Additionally, providers have more at stake than economic interests. The Commission's order, particularly the portion requiring presubscription, affects the providers' ability to communicate with potential customers. The order is analogous to requiring a magazine or newspaper publisher to distribute to subscribers only, preventing newsstand sales or "giveaways." Thus, the Commission's order may impair the providers' fundamental rights under the federal and Arizona constitutions.

Consequently, we concluded that the applicants could intervene as petitioners.

ISSUES PRESENTED

The parties raise an array of constitutional issues: separation of powers, free speech, freedom of contract. The separation of powers issue pertains to the relationship between the Commission and legislature. The Commission asserts that it has jurisdiction to regulate Mountain Bell, a public service corporation, either exclusively or concurrently with the legislature. See Ariz. Const. art. 15, §§ 3 and 6. The Commission necessarily argues, therefore, that the legislature has not preempted Decision No. 56039, either because the legislature cannot constitutionally do so ⁹ or, alternatively, because properly interpreted, A.R.S. §§ 13-2920 and -3512 do not preempt the decision.

Mountain Bell contends that the legislature has jurisdiction to regulate ScoopLine service and that the Commission's order conflicts with the statutes and is void. Mountain Bell claims, also, that the Commission's presubscription order unconstitutionally burdens its right of free speech.

In addition to adopting Mountain Bell's claims, the providers argue that the presubscription requirement interferes with their free speech rights and will actually destroy this new method of communication. They point out that people tend not to presubscribe to services such as weather information. Instead, they call such services spontaneously when and if they have a need for particular information.

Finally, Mountain Bell and the providers claim that the Commission's order unconstitutionally impairs due process rights to contract and violates Mountain Bell's right to equal protection.

Faced with numerous constitutional issues, jurisprudential considerations require us to decide the case on the narrowest grounds possible. Cf. Lyng v. Northwest Indian Cemetery Protective Association, 485 U.S. 439, ----, 108 S.Ct. 1319, 1323, 99 L.Ed.2d 534 (1988) ("fundamental and long-standing principle of judicial restraint requires that courts avoid reaching constitutional questions in advance of the necessity of deciding them"). The free speech issue enables us to decide this case by applying well established principles and without analyzing the respective roles of the Commission and the state legislature in Arizona's system of government. Consequently, we turn to the speech issue. ¹⁰

FREEDOM OF SPEECH

A. Free Speech Under the Arizona Constitution

The Commission argues that the order is no more than a regulation of utility service and any impact of first amendment rights is incidental and permissible. Both Mountain Bell and the providers argue that the Commission's order curbs free speech rights protected by both the first amendment to the United States Constitution and art. 2, § 6 of the Arizona Constitution. The providers specifically invoke the Arizona Constitution, arguing that " § 6 may offer substantially more protection to free...