New Cingular Wireless PCS, LLC v. Pub. Utilities Comm'n of Cal.

• Decision Date: 19 April 2016
• Docket Number: A144005
• Citation: 201 Cal.Rptr.3d 652,246 Cal.App.4th 784
• Court: California Court of Appeals Court of Appeals
• Parties: NEW CINGULAR WIRELESS PCS, LLC et al., Petitioners, v. PUBLIC UTILITIES COMMISSION of the State of California, Respondent; The Utility Reform Network et al., Real Parties in Interest.

246 Cal.App.4th 784

201 Cal.Rptr.3d 652

NEW CINGULAR WIRELESS PCS, LLC et al., Petitioners,

v. PUBLIC UTILITIES COMMISSION of the State of California, Respondent;The Utility Reform Network et al., Real Parties in Interest.

A144005

Court of Appeal, First District, Division 4, California.

Filed April 19, 2016

Mayer Brown, J. Tyson Covey, Hans J. Germann ; AT & T Services, Inc., J. Scott Paisley, San Diego, David P. Discher, San Francisco, Niki B. Okcu, Burlingame, for Petitioners.

California Public Utilities Commission, Karen V. Clopton, Helen W. Yee, Maria Bondonno, San Francisco, for Respondent.

The Utility Reform Network, Robert Finkelstein and Christine Mailloux; Center for Accessible Technology, Melissa W. Kasnitz, Berkeley, for Real Parties in Interest.

Streeter, J.

Here we decide whether the Public Utilities Commission of the State of California (CPUC) properly awarded fees and costs to two intervenors, The Utility Reform Network (TURN) and the Center for Accessible Technology (CforAT), for their work in a complex telecommunications merger review proceeding dismissed by the CPUC as moot for reasons unrelated to anything that happened in the proceeding itself.

A group of entities affiliated with AT & T, Inc. (AT & T), one of the merger proponents, filed a petition for a writ of review seeking reversal of these awards. The petition alleges that neither TURN nor CforAT "substantially assisted the commission in the making of its order or decision" (Pub.Util.Code, § 1802 ) and therefore that neither of them made a "substantial contribution" to the proceeding, as that phrase is specifically defined in Public Utilities Code, Part I, Chapter 9, Article 5, sections 1801 et seq. (Article 5),¹ the statutory scheme governing intervenor compensation in the CPUC's proceedings.

We deny the requested writ relief, but for reasons explained below will nonetheless vacate the challenged awards without prejudice to the renewal and redetermination by the CPUC of TURN's and CforAT's requests for fees and costs.

I. PROCEDURAL BACKGROUND

Five years ago, AT & T sought to acquire T–Mobile USA, then a subsidiary of Deutsche Telekom, and merge the operations and infrastructure of T–Mobile USA into itself. The prospect of this combination attracted immediate and intense regulatory scrutiny nationwide.

Beginning in approximately April 2011, when the AT & T/T–Mobile merger proposal was announced, and for the next five months, the Federal Communications Commission (FCC), the United States Department of Justice, and various state regulatory agencies, undertook overlapping investigation and review proceedings to determine whether the merger would have adverse effects on competition and customer service, and if so, whether mitigation measures were warranted as a condition of regulatory approval. In California, the center of the action was the CPUC's investigatory proceeding in this case, Investigation No. 11–06 –009 (hereafter Docket No. I11–06–009), which commenced June 9, 2011 pursuant to an Order Instituting Investigation (OII). Among the participants in Docket No. I11–06–009 were the petitioners here, New Cingular Wireless PCS, LLC, AT & T Mobility Wireless Operations Holdings Inc., Santa Barbara Cellular Systems, Ltd., and AT & T Mobility Wireless Operations Holdings, LLC (collectively, New Cingular), which are all entities owned directly or indirectly by AT & T.

The OII set an expedited schedule under which any and all comments from interested parties had to be submitted within 60 days. Procedurally, the CPUC sought to carry out and complete the investigation of a complex transaction having national scope within a few months, and in doing so, to build an evidentiary record robust enough for the CPUC's staff to prepare written comments for filing in the FCC proceedings. The end goal was to enable the CPUC to provide its input on the impact of the proposed merger in California and to take a position on any appropriate mitigation conditions, should the merger be approved by the FCC. Since the FCC proceedings were themselves unfolding on an expedited schedule, with a target for completion by year-end 2011, maintaining the required schedule in Docket No. I11–06–009, without slippage, was of paramount importance. The CPUC apparently believed it could not accomplish all of this on its own, solely with staff support, because upon issuance of the OII it immediately invited participation from a group of intervenors, including TURN and CforAT.

TURN appears to have taken a leading role in the proceeding from the beginning, starting with its successful advocacy concerning the need for an intensive review of the proposed transaction before the OII even issued.² At the outset of the proceeding, TURN won some crucial procedural victories that kept things on track, first defeating an effort by AT & T to stop the investigation based on jurisdictional and preemption arguments that the CPUC has no authority to regulate wireless telephone carriers,³ and then arguing successfully that the OII proceeding should be categorized as a "procedural rate-setting proceeding," which had the effect of triggering a number of rules designed to ensure public transparency (among other things, restrictions on ex parte contacts).⁴ On TURN's motion, the administrative law judge (ALJ) took official notice of a complaint filed by the Department of Justice seeking to enjoin the AT & T/T–Mobile merger.⁵ TURN also prevailed in numerous scheduling disputes and discovery contests.⁶ As a result of these preliminary rulings, TURN and all other parties in Docket No. I11–06–009 were able to obtain, subject to a protective order, thousands of pages of confidential data—including a financial model of the proposed merger that was essential for economic analysis of its impacts in California—in time to analyze and file detailed comments within the tight time-frames required by the schedule.

The CPUC placed a high priority on obtaining maximum public input during the investigatory process. Thus, "[c]onsistent with the direction set forth in the OII, the Assigned Commissioner and the ALJ held workshops and public participation hearings throughout California in the month of July [2011], to gather information on specific issues related to the proposed merger and to hear public comment. Each workshop was facilitated by the assigned ALJ, with the assigned Commissioner and other Commissioners in attendance. Participants at each workshop included independent experts, representatives of the respondents and other market participants, and representatives of other interested groups, including unions, consumer advocates, and others. Each workshop consisted of panel presentations, and provided opportunities for parties to ask questions of panel members. Each workshop also included time during which members of the public could comment." (Decision Dismissing Investigation Into Acquisition of T–Mobile by AT & T and New Cingular Wireless (Aug. 23, 2012) Cal.P.U.C. Dec. No. 12–08–025, p. 6 [2012 Cal.P.U.C. Lexis 365, p. *8] (hereafter Final Decision and Order).)

A key piece of the CPUC's record-building process in Docket No. I11–06–009 was economic analysis, which is often at the core of antitrust litigation, and is something that typically requires examination of voluminous financial data. In this area, the bulk of the work was done by TURN's expert economist, Dr. Trevor Roycroft, who filed a detailed affidavit setting forth his opinions in August 2011. Before filing his affidavit, Dr. Roycroft appeared and presented his views at a public workshop on July 22, 2011. At all three workshops, speakers from TURN presented their views, arguing that the proposed merger would have serious anticompetitive effects in California. Consistent with the position it took from the beginning of the proceeding in favor of public transparency, TURN later sought to persuade the ALJ that the transcripts of these workshops should be posted and made available publicly. The ALJ so ordered.⁷

Before the CPUC had occasion to prepare comments for submission to the FCC, AT & T and Deutsche Telekom unexpectedly announced the withdrawal of their proposed merger transaction (see Federal Communications Com., Order No. DA 11–1955 (Nov. 29, 2011) p. 2, at < https://apps.fcc.gov/edocs_public/attachmatch/DA–11–1955A1.pdf> [as of April 19, 2016].), and in November 2011 moved to dismiss Docket No. I11–06–009 on grounds of mootness. The CPUC granted that motion on August 23, 2012 (the Final Decision and Order). The Final Decision and Order was more than a naked, unexplained dismissal. It addressed and decided a number of collateral matters, including whether to adopt all of the interim rulings that had issued in the course of the proceeding. In section 5 entitled "Affirmation of All Rulings," the CPUC explained: "All Rulings by the assigned ALJ and assigned Commissioner in the course of this proceeding, including rulings made by electronic mail, are affirmed. Rulings affirmed through this decision include the July 5, 2011, ruling requiring that AT & T provide and pay for support services for all workshops and public participation hearings held in this proceeding. In addition, this decision affirms various electronic mail rulings modifying the proceedings, schedules, granting party status to [specified intervenors], and addressing other procedural issues."

The Final Decision and Order also addressed the issue of intervenor compensation, explaining as follows: "The former merger proponents moved to dismiss this proceeding after approximately six months of concentrated effort to evaluate the proposed transaction, undertaken in good faith by Commission staff and parties participating in this proceeding. Given the advanced stage of the proceeding at the time the respondents abandoned the proposed transaction and requested dismissal, it is reasonable for the Commission to acknowledge the work done by parties to this proceeding, and to explicitly state that requests...