Bullseye Telecom, Inc. v. Cal. P.U.C.
A160729
| Cal. Ct. App. | Jul 6, 2021Background
- Qwest (long-distance carrier) filed complaint with the California PUC alleging several California local carriers (CLECs) granted AT&T and Sprint discounted, off-tariff intrastate tandem-routed switched access rates that were not offered to Qwest, seeking reparations.
- Petitioners are CLECs (BullsEye, Arrival, Mpower, TelePacific, Cox) that had tariffs on file but also private contracts with AT&T/Sprint; the discounted contracts were not filed with the PUC.
- Administrative hearings occurred in 2013; the ALJ and the Commission initially dismissed Qwest’s complaint in 2016, finding Qwest not similarly situated and discounts rationally based.
- Qwest obtained rehearing; in 2019 (modified 2020) the PUC reversed, finding switched access a monopoly bottleneck service, Qwest similarly situated, no rational basis for different treatment, and ordered a Phase II to determine reparations.
- Petitioners sought writ review arguing procedural defects (no new evidentiary rehearing, departure from scoping memo), error in legal framework (monopoly-bottleneck finding), and that any reparations would violate statutes prohibiting refunds and discrimination.
Issues
| Issue | Qwest's Argument (Plaintiff) | Petitioners' Argument (Defendant) | Held |
|---|---|---|---|
| Whether the PUC was required to hold a new evidentiary hearing on rehearing | Rehearing may be resolved on the existing record and briefs when no new facts require live evidence | Sections 1731/1736 and rehearing practice require a full new evidentiary hearing, scoping memo, and prehearing process | Court: PUC not required to conduct a new evidentiary hearing on rehearing absent new facts; reconsideration on record satisfied statutory rehearing scheme |
| Whether switched access is a monopoly bottleneck service and whether the PUC improperly treated that as new rule applied retroactively | Switched access is a bottleneck service; for such services cost differences are the only proper rational-basis justification | Petitioners: treating switched access as a monopoly bottleneck (and applying it to CLECs) was new, retroactive rulemaking harming defendants | Court: PUC long ago recognized switched access as a bottleneck; decision applied existing legal principle to facts and did not unlawfully adopt a new rule |
| Whether PUC departed prejudicially from the Scoping Memo by narrowing the ‘‘willing and able’’ and ‘‘rational basis / similarly situated’’ inquiries (focusing on cost) | Given monopoly-bottleneck nature, Qwest only needed to show it would accept switched-access terms; PUC properly focused on whether cost differences justified discrimination | Petitioners: scoping memo and prior decisions required full ‘‘willing and able’’ inquiry and broader rational-basis factors; narrowing to cost deprived them of fair notice and prejudice | Court: PUC’s approach was within scope; parties had opportunity to present cost evidence; petitioners showed no prejudice or inability to present contrary evidence |
| Whether an award of reparations/refunds would violate the filed-rate prohibition (section 532) or the anti-discrimination proviso in section 734 | PUC may order reparations under section 734 for discriminatory/unreasonable rates; such awards do not automatically violate section 532 or section 734’s final clause | Petitioners: any refund would effectively grant Qwest an unfiled rate (violating section 532) and discriminate against carriers who paid tariff rates (violating section 734) | Court: Rejected petitioners’ reading; prior authorities permit reparations where similarly situated customers had opportunity to seek relief and PUC can make exceptions under section 532; reparations would not necessarily violate statutes and are premature to decide until Phase II |
Key Cases Cited
- San Diego Gas & Electric Co. v. Superior Court, 13 Cal.4th 893 (Cal. 1996) (PUC constitutional authority and broad regulatory powers)
- Pacific Gas & Electric Co. v. Public Utilities Com., 237 Cal.App.4th 812 (Cal. Ct. App. 2015) (deference to agency decisions and burden on challenger)
- Southern California Edison Co. v. Public Utilities Com., 140 Cal.App.4th 1085 (Cal. Ct. App. 2006) (writ-review practice; courts grant writs to examine potential errors)
- Pacific Bell Wireless, LLC v. Public Utilities Com., 140 Cal.App.4th 718 (Cal. Ct. App. 2006) (agency statutory interpretation entitled to deference absent unreasonable relation to statute)
- Hansen v. City of San Buenaventura, 42 Cal.3d 1172 (Cal. 1986) (discrimination alone insufficient; must be without reasonable basis such as cost)
- Cellular Plus, Inc. v. Superior Court, 14 Cal.App.4th 1224 (Cal. Ct. App. 1993) (reparations/damages do not necessarily constitute illegal refunds or discrimination under state statutes)
- AT&T Corp. v. Federal Communications Comm’n, 292 F.3d 808 (D.C. Cir. 2002) (recognizing access markets as bottleneck monopolies)
- United States v. Western Elec. Co., 627 F. Supp. 1090 (D.D.C. 1986) (context on access services and limits on alternatives)
- PG&E Corp. v. Public Utilities Com., 118 Cal.App.4th 1174 (Cal. Ct. App. 2004) (standards on writ review)