Teleconnect Co. v. Iowa State Commerce Com'n

• Citation: 366 N.W.2d 515
• Decision Date: 17 April 1985
• Docket Number: No. 84-724,84-724
• Parties: TELECONNECT COMPANY, Appellant, v. IOWA STATE COMMERCE COMMISSION, Appellee.
• Court: Iowa Supreme Court

Page 515

366 N.W.2d 515

TELECONNECT COMPANY, Appellant, v. IOWA STATE COMMERCE COMMISSION, Appellee.

No. 84-724.

Supreme Court of Iowa.

April 17, 1985.

Thomas Collins, Richard C. Garberson, Joan Lipsky, and Kevin H. Collins of Shuttleworth & Ingersoll, P.C., Cedar Rapids, for appellant.

Philip E. Stoffregen, Gen. Counsel, Patrick J. Nugent, Deputy Counsel, and David J. Lynch, Asst. Gen. Counsel, Des Moines, for appellee.

Considered en banc.

LARSON, Justice.

Teleconnect Company appeals from a district court order dismissing its petition for judicial review and lifting a stay order previously granted. It claims the court erred in depriving Teleconnect of notice and hearing prior to the dismissal, because it acted without authority and denied it procedural due process. The appellee Iowa State Commerce Commission cross-appealed, claiming Teleconnect's failure to serve a copy of its petition for judicial review on the Office of the Consumer Advocate, Iowa Code section 475A.5 (1983 Supp.), deprived the district court of jurisdiction. The commission also argues on cross-appeal that the district court should have considered the commission's action dismissing Teleconnect's petition for declaratory ruling as a contested case proceeding for all purposes, not merely for the purpose of determining whether the agency action was final. We affirm on both appeals.

The controversy in this case centers around Iowa Code section 476.1, as amended by 1983 Iowa Acts chapter 127, section 15, now appearing as Iowa Code section 476.1 (1985). This section limits the jurisdiction of the commerce commission with respect to long distance communication services as follows:

The jurisdiction of the commission as to the regulations of communications services is not applicable to a service or facility provided by a telephone utility that is or becomes subject to competition, as determined by the commission. In determining whether a service or facility is or becomes subject to competition, the commission shall consider whether a comparable service or facility is available from a supplier other than the telephone utility. When a service or facility provided by a telephone utility becomes subject to competition, the commission shall, within a reasonable period of time, deregulate that service or facility. [Emphasis added.]

On February 16, 1984, Teleconnect filed, with the commerce commission, a petition for declaratory ruling, seeking a determination that it was not subject to regulation by the commission because it was "subject to competition" within the meaning of section 476.1, as amended. The petition offered to provide the commission with any additional evidence or information relevant to this issue.

The commission dismissed Teleconnect's petition on February 24, 1984, pursuant to Iowa Administrative Code section 250--4.6(12). That section provides that the commission may dismiss when "[t]he petitioner requests a declaratory ruling which, though technically binding only upon the commission and the petitioner, would necessarily determine the legal rights of other persons who have not filed such a petition and whose position on the issue may fairly be presumed to be adverse to the petitioner, or who are unrepresented in the declaratory ruling proceeding." The commission noted that such entities as AT & T of the Midwest, Northwestern Bell, MCI, GTE Sprint, and other long distance providers would "clearly be affected by any determination affecting Teleconnect."

The order did, however, contemplate other commission proceedings to address this issue. Specifically, it suggested that orders would be filed requiring Teleconnect and other exchange carriers to either file tariffs or show cause why they should be exempt. Additionally, the commission indicated that it was considering the initiation of rule-making proceedings to determine what factors would be considered in deciding whether a facility was "subject to competition" under section 476.1.

Teleconnect filed a petition for judicial review on March 7, 1984, requesting that the district court determine the issue the commission had refused to consider, i.e., whether Teleconnect was "subject to competition" within the meaning of section 476.1. (The petition for judicial review was not served on the Office of Consumer Advocate, and this presents one of the cross-appeal issues.)

The following day, on March 8, 1984, the commission entered the order which it had alluded to in the February 24 order. It asserted that Teleconnect had not filed tariffs, as required by Iowa Code section 476.1, and required Teleconnect to either file tariffs or show cause why it should not be required to do so. The order further provided that, if the company chose not to comply, the commission would set a hearing to determine if civil penalties were justified. This order was later stayed by the district court.

On March 23, 1984, Teleconnect filed an amended petition. Division I asserted that the commission, although not directly, actually had decided the merits of the "competition" issue, adversely to Teleconnect, by ordering it to file tariffs, thus exercising jurisdiction over it. Division II alternatively urged that, if the district court should find that the issue had not been determined by the commission, it should order that the commission decide it.

Iowa Rule of Civil Procedure 333(b) provides a procedural schedule for contested case proceedings:

Upon request of any party the reviewing court shall, or upon its own motion may, establish a schedule for the conduct of the proceeding.

The commission filed a motion pursuant to that rule, apparently presuming it would be treated as a contested case proceeding, and asked that a schedule be established. Teleconnect, on the other hand, sought a pretrial conference for the purpose of establishing briefing deadlines, oral arguments, and an opportunity to present evidence, apparently assuming it would not be treated as a contested case proceeding. Further responses were filed by both sides on the issue of whether the case should be treated as a contested case and specifically whether presentation of additional evidence would be permitted.

A pretrial hearing was held, which the court indicated was for the purpose of establishing ground rules and a procedural schedule. Although the subjects of dismissal and dissolution of the stay were not discussed at great length, the district court did conclude that it had to resolve the proper scope of its activity before considering any action urged by Teleconnect. Teleconnect's petition for judicial review was dismissed by order of the district court on April 15, 1984 without further notice or hearing. This appeal followed.

I. The "Sua Sponte" Dismissal of the Petition for Judicial Review.

Teleconnect maintains the district court erred in dismissing its petition for judicial review without notice of its intention to do so and without affording it a hearing and opportunity to resist. It also raises an issue of procedural due process in respect to that action.

Iowa Code section 17A.9 deals with agency declaratory rulings. It provides:

Each agency shall provide by rule for the filing and prompt disposition of petitions for declaratory rulings as to the applicability of any statutory provision, rule or other written statement of law or policy, decision or order of the agency. Rulings disposing of petitions have the same status as agency decisions or orders in contested cases.

The commerce commission has adopted rules governing declaratory rulings. See I.A.C. § 250--4.1-.7. (There is no contention that Teleconnect did not comply with these rules in filing its petition for declaratory ruling with that agency.) The commission also has rules defining the conditions for dismissal of petitions for declaratory rulings. These rules, in pertinent part, state:

250--4.6(17A,474) Dismissal. The commission may, in its discretion, dismiss the petition for any reason which it deems just and proper, including, but not limited to, the following:

....

12. The petitioner requests a declaratory ruling which, though technically binding only upon the commission and the petitioner, would necessarily determine the legal rights of other persons who have not filed such a petition and whose position on the issue may fairly be presumed to be adverse to the petitioner, or who are unrepresented in the declaratory ruling proceeding.

Citing subsection 12 of its rule, the commerce commission refused to issue a ruling in this case, pointing out that other long distance carriers, such as AT & T, MCI, and GTE Sprint, would be affected by any ruling made on behalf of Teleconnect.

Iowa Code section 17A.19 provides the exclusive means of judicial review of agency action. Public Employment Relations Board v. Stohr, 279 N.W.2d 286, 289 (Iowa 1979) (citing Richards v. Iowa State Commerce Commission, 270 N.W.2d 616, 619 (Iowa 1978) ). " 'Agency action' includes a declaratory ruling or a refusal to issue such a ruling." See § 17A.2(9); Burlington Community School District v. Public Employment Relations Board, 268 N.W.2d 517, 521 (Iowa 1978). Cf. Schmitt v. Iowa Department of Social Services, 263 N.W.2d 739, 743 (Iowa 1978) (refusal to adopt rules requested by citizen was reviewable agency action). Because, in this case, the commission's refusal to issue a declaratory ruling was a final action, all administrative remedies were exhausted. See Iowa Code §§ 17A.15, .19(1). The commission's dismissal of Teleconnect's petition for a declaratory ruling was thus reviewable under the standards furnished by section 17A.19(8).

A district court, reviewing agency action, exercises only appellate jurisdiction. Campbell v. Iowa Beer and Liquor Control Department, 366 N.W.2d 574, 576 (Iowa 1985); Stohr, 279 N.W.2d at 290; Iowa Public Service Company v. Iowa State Commerce Commission, 263 N.W.2d 766, 768-69 (Iowa 1978). As we have previously noted, "[w]hen resolution of a...