Sokol v. Public Utilities Commission

• Decision Date: 29 September 1966
• Docket Number: S.F. 22187
• Citation: 418 P.2d 265,65 Cal.2d 247,53 Cal.Rptr. 673
• Court: California Supreme Court
• Parties: , 418 P.2d 265, 65 P.U.R.3d 350 Edgar J. SOKOL, Petitioner, v. PUBLIC UTILITIES COMMISSION, Respondent; PACIFIC TELEPHONE AND TELEGRAPH COMPANY, Real Party in Interest; Thomas C. Lynch, as Attorney General, etc., Intervener. In Bank

Page 673

53 Cal.Rptr. 673

65 Cal.2d 247, 418 P.2d 265, 65 P.U.R.3d 350

Edgar J. SOKOL, Petitioner, v. PUBLIC UTILITIES COMMISSION, Respondent PACIFIC TELEPHONE AND TELEGRAPH COMPANY, Real Party in Interest Thomas C. Lynch, as Attorney General, etc., Intervener.

S.F. 22187.

Supreme Court of California,

In Bank.

Sept. 29, 1966.

Rehearing Denied Oct. 26, 1966.

Marshall W. Krause and Leo E. Borregard, San Francisco, for petitioner.

Mary Moran Pajalich, Roderick B. Cassidy and Timothy E. Treacy, San Francisco, for respondent.

Pillsbury, Madison & Sutro, John A. Sutro, Noble K. Gregory, James F. Kirkham and Walter R. Allan, San Francisco, for real party in interest.

Thomas C. Lynch, Atty. Gen., Albert W. Harris, Jr., Asst. Atty. Gen., John F. Kraetzer and Daryl Granberg, Deputy Attys. Gen., for intervener.

MOSK, Justice.

Petitioner seeks review of an order of the Public Utilities Commission which reaffirms a commission rule requiring a communications utility to summarily discontinue service to a subscriber if advised by any law enforcement agency that the service is being used for unlawful purposes. We conclude that inherent in this naked rule is a constitutional infirmity, but that the defect is not necessarily incurable if the rule is appropriately amended.

Petitioner operated a club which, for dues of five dollars, supplied its members with predictions as to the fleetest horses at local racetracks, an activity which the parties concede violated no state or local law. This information was communicated to the members by telephone. In a letter dated October 11, 1961, and addressed to Pacific Telephone and Telegraph Company (hereinafter Pacific), the San Francisco Chief of Police asserted that he had reasonable cause to believe that the telephones supplied to petitioner were being used in connection with illegal bookmaking activity. The letter further stated, 'In accordance with the order of the State of California Public Utilities Commission decision number 41415 * * * it is requested that you disconnect (the) telephone service.'

Decision No. 41415, cited in the letter, requires that a communications facility discontinue service to any subscriber the utility has reasonable cause to believe is using the service in connection with unlawful activity. A written notice from a law enforcement official that a telephone is being used for such purpose is declared to be sufficient to constitute reasonable cause. The decision also sets forth procedure by which the subscriber may file a complaint with the commission after the removal of the telephone; it further provides that the action before the commission shall be the exclusive means of challenging the termination of service, and thus insulates the communications utility from civil damage actions. ¹

Petitioner's telephones were disconnected on October 13, 1961, and five days later he filed a complaint with the commission seeking restoration of service. Pursuant to an interim order of the commission, service was temporarily restored on October 27, 1961. A hearing subsequently took place, and in January 1962 the commission issued Decision No. 63178, which held that there was insufficient evidence in the record to support the allegation that the telephone facilities had been used for illegal purposes and ordered the interim relief to be made permanent. The decision found that Pacific had 'acted upon reasonable cause in disconnecting said facilities.'

In October 1962 petitioner filed an action in superior court against Pacific, certain of its employees, and various police officers, seeking damages for the wrongful discontinuance of service. In Pacific Tel. & Tel. Co. v. Superior Court (1963) 60 Cal.2d 426, 34 Cal.Rptr. 673, 386 P.2d 233, we granted Pacific's petition for a writ of prohibition restraining the trial of that action. We found that an essential issue in the case was the validity of Decision No. 41415 and concluded that it was beyond the jurisdiction of the superior court to pass upon the validity of Public Utilities Commission decisions. However, we noted then that petitioner had filed the proceeding presently before us with the commission and stated (at p. 430, 34 Cal.Rptr. at p. 676, 386 P.2d at page 236), 'The validity of (Decision No. 41415) and the power of the commission to rescind it may be determined in plaintiff's proceeding before the commission subject to review by this court.'

Petitioner's complaint requests that the commission retroactively repeal Decision No. 41415 or declare it to be unconstitutional, and modify Decision No. 63178 accordingly. That complaint resulted in Decision No. 69510, in which the commission found its prior decisions to be constitutional and reaffirmed the procedures established by those decision. While chronology has brought Decision No. 69510 before us for review, the substantive issue involves the validity of the basic rule promulgated in Decision No. 41415.

At the threshold we meet Pacific's contention that the principle of res judicata bars us from reaching the substantive issue presented in this action. Pacific insists that Decision No. 63178 conclusively established that the company had reasonable cause to terminate petitioner's telephone service and that petitioner waived his right to challenge the finding of reasonable cause by permitting the decision to become final.

We cannot overlook the fact that Decision No. 63178 involved only petitioner's right to permanent restoration of telephone service, and the relief which he sought was granted in full. The proceeding was brought pursuant to the procedure established in Decision No. 41415, the purpose of which was to afford petitioner the opportunity to obtain prospective relief without undue delay. It would be incompatible with this purpose to require him to raise issues other than those relating to his demand for restoration of service. His right to such relief turned not upon the issue of probable cause as of the time service was terminated, but upon whether the facts presented at the hearing demonstrated that he had used the telephones in connection with an illegal activity. Since the finding of reasonable cause was not a necessary element of the commission's order, petitioner is not barred from raising that issue in the instant proceeding. (See Albertson v. Raboff (1956) 46 Cal.2d 375, 384--385, 295 P.2d 405.) ²

We next face another preliminary procedural problem raised by the Attorney General, who has intervened in this proceeding. He argues that a petition for rehearing was filed with the commission on August 20, 1965 (and not denied until December 7, 1965), that the petition for rehearing should be deemed to have been denied 20 days after it was filed even though it had not yet actually been denied (see Pub.Util.Code, § 1733), and that the petition to this court was required to be filed within an additional 30 days, or by October 9, 1965 (see Pub.Util.Code, § 1756). The petition was filed on November 12, 1965. Public Utilities Code section 1733 provides that 20 days after a petition for rehearing has been filed, it 'may be taken By the party making the application to be denied. * * *' (Italics added.) The language of the section is permissive rather than mandatory, and appears to have been enacted solely for the benefit of the party making the application. We find no authority in support of a contrary interpretation. Thus the proceeding is properly before us and we reach the merits of the commission's decision.

No California case has dealt with the precise issue whether the procedures established in Decision No. 41415 are constitutionally infirm because they deprived petitioner of property without due process of law, first because they did not provide him with an opportunity to challenge the allegations of the police department until after his telephones had been removed and his business had been destroyed, and second, because the decision denies him any action against the telephone company for the wrongful discontinuance of service.

The holdings in other jurisdictions, to the extent they are apposite, are conflicting. Two New York cases upheld the right of communications companies to remove telephones at the request of the police. (Dente v. New York Telephone Co. (1944, Sup.Ct.) 55 N.Y.S.2d 688, 692; People v. New York Telephone Co. (1916) 173 App.Div. 132, 134, 159 N.Y.S. 369.) However, neither case involved a statute or administrative order requiring that service be terminated at the request of the police, and in People v. New York Telephone Co., supra, the court relied in part on the fact that the subscriber did not deny he had used his telephone for unlawful purposes. The New York courts appear to have treated the issue as one of private contractual rights.

In Taglianetti v. New England Tel. & Tel. Co. (1954) 81 R.I. 351, 357--358, 103 A.2d 67, the court held that guarantees of the Fourteenth Amendment could not be invoked by the subscriber because the removal of his telephone did not constitute state action, even though the company acted at the express request of the police. Here, Decision No. 41415 Requires the company to remove any telephone which the police request be removed. In such circumstances, the involvement of state officials is not obscured by the act of the telephone company employee who physically disconnects the telephones. (See Burton v. Wilmington Parking Authority (1961) 365 U.S. 715, 725, 81 S.Ct. 856, 6 L.Ed.2d 45; Mulkey v. Reitman (1966) 64 A.C. 557, 570, 50 Cal.Rptr. 881, 413 P.2d 825.)

Cases from other jurisdictions contain statements to the effect that a hearing is required prior to discontinuance of service, but in many of these opinions the language is dictum. In some, the subscriber was notified prior to the termination of service and the action was brought to enjoin the impending termination. (Andrews v. Chesapeake & Potomac Telephone Co. (D.D.C.1949) 83 F.Supp. 966; Tollin v. Diamond State...