Peninsula Tel. & Tel. Co. v. Washington Utilities and Transp. Commission

• Citation: 575 P.2d 1066,89 Wn.2d 795
• Decision Date: 09 March 1978
• Docket Number: No. 44798,44798
• Parties: , 25 P.U.R.4th 150 PENINSULA TELEPHONE AND TELEGRAPH COMPANY, a Washington Corporation, Appellant, v. The WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION, an administrative agency of the State of Washington, and Pacific Northwest Bell Telephone Company, a Washington Corporation, Respondents.
• Court: United States State Supreme Court of Washington

Page 795

89 Wn.2d 795

575 P.2d 1066, 25 P.U.R.4th 150

PENINSULA TELEPHONE AND TELEGRAPH COMPANY, a Washington Corporation, Appellant, v. The WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION, an administrative agency of the State of Washington and Pacific Northwest Bell Telephone Company, a Washington Corporation, Respondents.

No. 44798.

Supreme Court of Washington, En Banc.

March 9, 1978.

Fristoe, Taylor & Schultz, Ltd., P.S., Theodore D. Schultz, Olympia, for petitioner.

Slade Gorton, Atty. Gen., Frank P. Hayes, John W. Hough, Asst. Attys. Gen., Olympia, Thomas R. Beierle, Gen. Atty., Seattle, for respondents.

DOLLIVER, Associate Justice.

This is an appeal from the Superior Court for Thurston County which affirmed the ruling of the Washington Utilities and Transportation Commission (Commission) in a rate dispute between Peninsula Telephone and Telegraph Company (PenTel) and Pacific Northwest Bell Telephone Company (PNB). Plaintiff and defendant PNB participate in providing telephone services between and beyond the respective telephone exchanges of each company. This controversy involves division of joint toll revenues for the time period between September 7, 1969 and August 15, 1970, during which no agreement existed between the companies establishing a revenue division rate.

Division of revenues generated by these services is accomplished by establishing a rate which equitably apportions the joint toll revenue, and this matter of revenue division has been in dispute for a number of years. In 1960 two independent telephone companies, West Coast Telephone Company and General Telephone Company of the Northwest, instituted causes Nos. U-9208 and U-9224 before the Washington Public Service Commission (now the Washington Utilities and Transportation Commission) to obtain an order fixing the methods to be used in dividing the joint toll revenues generated by intrastate toll messages. See West Coast Tel. Co. v. Pacific Tel. & Tel. Co., 42 P.U.R.3d 65 (1961). Several other independent telephone companies, including PenTel, intervened. The Commission ultimately determined the "Charleston Plan" was the most equitable method by which to apportion the joint toll revenues and ordered the independents and Pacific Telephone and Telegraph Company (the predecessor of Pacific Northwest Bell Telephone Company) to negotiate the respective rate of return allowed to each company and to report to the Commission within 90 days.

The order was appealed and ultimately reached this court. Our holding affirmed all orders of the Commission in the two causes. We further noted, "The Commission retained jurisdiction of the proceedings to effectuate the provisions of the order." See State ex rel. Pacific Northwest Bell Tel. Co. v. Washington Util. & Transp. Comm'n, 66 Wash.2d 411, 441, 403 P.2d 73 (1965).

Prior to our decision, PenTel and PNB entered into an agreement November 14, 1962, which resolved the issue of fair rate of return. This agreement, employing the Charleston Plan, remained operative until its termination by PenTel effective September 7, 1969. The termination complied with the contractual term allowing cancellation by either party within a specified time after written notice.

Prior to the cancellation, on January 3, 1969 the Washington Independent Telephone Association (WITA), of which PenTel is a member, intervened in the proceedings before the Commission in cause No. U-9880, asking the Commission to establish a different means of dividing joint toll revenue.

On September 29, 1970, pursuant to a petition filed by WITA and PNB, the Commission entered an order in No. U-9880 which, among other things (1) approved a new separations agreement, the "Ozark Plan", as the basis for division of intrastate revenues in Washington effective August 15, 1970; (2) set aside the order in causes Nos. U-9224 and U-9208 and declared them to be no longer applicable as of August 15, 1970; and (3) provided that any changes in intrastate toll settlement procedures negotiated between telephone companies and deviating from the Ozark Plan would be subject to Commission scrutiny.

Because the Charleston Plan was in effect until September 7, 1969, and the Ozark Plan was agreed upon between PenTel and PNB for periods subsequent to August 15, 1970, this dispute concerns amounts due during the time period between those two dates.

PenTel made no remittance to PNB for amounts allegedly accruing during the open period. PNB made no remittance to PenTel for amounts allegedly accruing after the effective date of the Ozark Plan, August 15, 1970. This resulted in PenTel's filing a complaint in Clallam County Superior Court for $73,851.95 allegedly due them from PNB for the time period September 7, 1969 through September 13, 1971.

As an offset in that suit, PNB claimed $21,116.40 which they alleged was due them for the time period September 7, 1969 through August 15, 1970. The court ruled PenTel was entitled to $38,481.53, plus interest, pursuant to the Ozark Plan for the time period subsequent to August 15, 1970. The court further determined it had no jurisdiction to divide revenues accruing during the open period. It stated:

(T)he Court does not have jurisdiction over the subject matter of the setoff . . . for the reason that the initial primary jurisdiction over the subject matter rests with the Washington Utilities and Transportation Commission.

Following dismissal of its claimed setoff, PNB initiated proceedings on June 19, 1972, before the Commission (cause No. 72-28 tp) to establish an equitable division of joint toll revenues for the open period from September 7, 1969 to August 15, 1970. Ruling in favor of PNB, the Commission stated:

1. By virtue of the provisions of RCW Title 81, the Washington Utilities and Transportation Commission has jurisdiction over the subject matter of this application.

2. To achieve the most just, reasonable and equitable division of intrastate joint toll revenues, this Commission should direct that settlements between PNB and PenTel for the period of September 7, 1969 to August 15, 1970, be made on the basis of paragraph IV(d) of the November 14, 1962 "Charleston Plan" type traffic agreement, and this Commission should determine the correct sum for that period based on paragraph IV(d) in the sum of $21,116.40, and without interest thereon.

3. PenTel could not unilaterally cancel the portion of the November 14, 1962 "Charleston Plan" traffic agreement and yet receive, as it did, the benefits of interconnection of facilities under that agreement. Paragraph IV(d) of that agreement is binding on the parties for the period of September 7, 1969 to August 15, 1970.

The Commission, having entered its findings of fact and conclusions of law herein, enters the following order.

ORDER

IT IS THEREFORE ORDERED That the fair, just, reasonable and equitable division of intrastate tolls between complainant Pacific Northwest Bell Telephone Company and respondent Peninsula Telephone and Telegraph Company, for the period of September 7, 1969 to August 15, 1970, due complainant is in the sum of $21,116.40, without interest thereon.

On July 20, 1973, PenTel filed its petition for review of the Commission ruling in Thurston County Superior Court and on July 21, 1975 the trial court entered its memorandum opinion affirming the Commission ruling.

Plaintiff PenTel first argues the Commission lacks subject matter jurisdiction to establish rates for the period in question. Its argument asserts...