Judd v Att Wa Petition for Review Phone Rates 2003

Type: Phone Litigation • May 14, 2003 • Topics: Telephones

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-J

-.: fILE COpy

RECEIVED
RECEIVED
COURT OF APPEALS

MAY' ,14:2003
P.TON OATS ,

!W8 LIJI

COURT OF APPEALS NO. 48075_8_~IVISJON ONE

MAY 1 4 2003
SUPREME COURT
OF THE STATE OF WASHINGTON

RECEIVED
MAY 14 2003
STOEL RIVES LLP

SANDY JUDD, TARA HERIVEL and ZURAYA WRIGHT,
for themselves, and on behalf of all similarly situated persons,
Petitioners,

v.
GTE NORTHWEST INC.;
CENTURYTEL TELEPHONE UTILITIES, INC.;
NORTHWEST TELECOMMUNICATIONS, INC.,
d/b/a PTI COMMUNICATIONS, INC.; and
U.S. WEST COMMUNICATIONS, INC.,
Respondents.

PETITION FOR REVIEW

Jonathan P. Meier
SIRIANNI YOUTZ
MEIER & SPOONEMORE
701 Fifth Avenue, Suite 3410
Seattle, W A 98104-7032
Telephone: (206) 223-0303
Facsimile: (206) 223-0246
Attorneys for Petitioners

RETURN COpy

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TABLE OF CONTENTS
I.

IDENTITY OF PETITIONERS ........................................................ .1

II.

COURT OF APPEALS DECISION .................................................. .1

III.

ISSUES PRESENTED FOR REVIEW ............................................. .!

IV.

STATEMENT OF THE CASE ........................................................... 2

ARGUMENT ...................................................................................... 2
A.

NATURE OF THE CASE AND SUMMARY OF THE
ARGUMENT ................................................................................ 2

THE DISCLOSURE STATUTES SET A MINIMUM
FLOOR OF DISCLOSURE THAT IS ACTIONABLE
IN THIS CASE; DISCLOSURE By TARIFF IS NOT
CONSISTENT WITH LEGISLATIVE INTENT................................ .5
1.

The Statutory Framework. ................................................ 5

The Disclosqre Statutes Create A Cause
Of Action Under The CPA...... ,........................................ 7

Disclosure By Tariff Is Inconsistent With
Legislative Intent. ............................................................. 8

A COURT MAY DETERMINE THE VALIDITY OF
A REGULATION IN A NON-APA REVIEW
PROCEEDING............................................................................ 11

THE WUTC's 1991 REGULATION AND ITS
DECISION TO GRANT WAIVERS FROM ITS 1999
REGULATION CONFLICT WITH THE
DISCLOSURE STATUTES ........................................................... 14

The 1991 Regulations Conflict With The
Disclosure Statutes Because They Alter A
Statutorily Defined Term................................................ 15

The WUTC Exceeded The Statutory
Scope Of Its Authority In Granting
Waivers ........................................................................... 19

THE COURT OF APPEALS ERRED IN
DISMISSING CENTURYTEL ON ALTERNATE
GROUNDS ................................................................................. 19

VI.

CONCLUSION ................................................................................. 20

iii

TABLE OF AUTHORITIES
CASES

Bird-Johnson Corp. v. Dana Corp.,
119 Wn.2d 423,833 P.2d 375 (1992) ................................................. 12
Caritas Serv., Inc. v. Department ofSocial & Health
Serv.,
123 Wn.2d 391,869 P.2d 28 (1994) ... ;............................................... 15
Chevron, Inc. v. Natural Resources De! Council,
467 U.S. 837 (1984) ............................................................................ 18
Department of the Army v. Blue Fox, Inc.,
525 U.S. 255 (1999) ...................................................................... 13, 14
Fondren v. Klickitat County,
79 Wn. App. 850 (1995) ..................................................................... 13
Gugin v. Sonico, Inc.,
68 Wn. App. 826, 846 P.2d 571 (1993) .............................................. 12
Judd v. American Tel. & Tel. Co.,
66 P.3d 1102, _ Wn. App. _

(2003) .............................................. 1

Manor v. Nestle Food Co.,
131 Wn.2d 439,932 P.2d 628 (1997) ....................................... 4, 11, 12
Seattle Professional Photographers Ass 'n v. Sears
Roebuck Co.,
9 Wn. App. 656, 513 P.2d 840 (1973) ................................................ 13
Senate Republican Campaign Comm. v. Public
Disclosure Comm 'n,
133 Wn.2d 229, 943 P.2d 1358 (1997) ............................................... 15
State v. Dodd,
56 Wn. App. 257, 783 P.2d 106 (1989) .............................................. 16
State v. Leek,
26 Wn. App. 651,614 P.2d 209 (1980) .............................................. 15
State v. Thompson,
95 Wn.2d 753,630 P.2d 925 (1981) ................................................... 12
Ward v. LaMonico,
47 Wn. App. 373, 735 P.2d 92 (1987) ................................................ 12
Washington Independent Tel. Ass 'n v. TRACER,
75 Wn. App. 356, 880 P.2d 50 (1994) ................................................ 20

STATUTES

19.86 RCW .......................................................................................... ;.. 6, 7
RCW 34.05.510 ............................................................................... 7, 11, 12
RCW 80.36.100 .......................................................................................... 8
RCW 80.36.510 ................................................................................. passim
RCW 80.36.520 ................................................................................. passim
RCW 80.36.522 ........................................................................................ 17
RCW 80.36.524 .................................................................................... 6, 17
RCW 80.36.530 ....... ;...................................................................... 1,5,6, 7
TREATISES

lA C. Sands, STATUTES AND STATUTORY
CONSTRUCTION § 27.02 at 310 (4th ed. 1972) .................................... 15
5A Charles A. Wright & Arthur R. Miller, Federal
Practice & Procedure § 1357, p. 339 (2d ed.
1990) ................................................................................................... 13
REGULATIONS

WAC 480-120-021 .................................................................................... 16
WAC 480-120-141(2)(b) ............................................................................ 6
WAC 80.36.520 .......................................................................................... 6

IDENTITY OF PETITIONERS

Petitioners Sandy Judd, Tara Herivel and Zurayah Wright petition
this court to accept review of the court of appeals decision tenninating
review designated in Part II ofthis petition.

COURT OF APPEALS DECISION

Petitioners seek review of Division One's decision in Judd v.
American Tel.

Tel. Co., 66 P.3d 1102, _

Wn. App. _

(2003). A

copy of the decision is in the Appendix at pages A-I through A-20.
III. ISSUES PRESENTED FOR REVIEW
(1)

Do RCW 80.36.510, .520 and .530 provide a cause of

action, and have plaintiffs stated a claim, for violation of the Consumer
Protection Act, based on defendants' failure to disclose telephone rates?
(2)

Must a consumer first bring a review proceeding under the

Administrative Procedure Act to attack the validity of agency action in
order to maintain an action for failure to disclose telephone rates under the
Consumer Protection Act?
(3)

If the answer to issue No.2 is no, does the WUTC's 1991

regulation conflict with the Disclosure Statutes and did the WUTC exceed
the scope of its statutory authority in granting waivers to defendants
Qwest and Verizon in 1999?
(4)

Did the court of appeals err in dismissing defendant

CenturyTel on the erroneous factual premise that it never provided long
distance service to correctional institutions?

IV. STATEMENT OF THE CASE
Petitioners seek review of a number of purely legal issues. To the
extent that factual or procedural issues are important, they are either
incorporated into the argument that follows or may be found in the
opinion of the court of appeals.

v.
A.

ARGUMENT

NATURE OF THE CASE AND SUMMARY OF THE
ARGUMENT.

In 1988, the state Legislature enacted a series of statutes imposing
rate disclosure requirements on all companies providing operator-assisted
long distance service from public telephones.

These statutes (the

"Disclosure Statutes") addressed a growing problem.

The calls were

expensive and companies often failed to disclose rates at the time a call
was placed or accepted.

To remedy the situation, the Legislature

expressly provided that violation of the disclosure requirements
constitutes aper se violation of the Consumer Protection Act (CPA).
Among the beneficiaries of this law were the friends and families
of inmates at state prisons. When inmates and family members, friends, or
attorneys want to call each other, they may do so only by having the
inmate place a collect call on a prison payphone. This telephone service is
provided through contracts between the Washington Department of
Corrections and "alternate operator services companies," or AOS
companies. The defendants in this case are all AOS providers and billed
thousands of recipients of inmate calls. They failed, however, to disclose
rate information to these people for over ten years after the laws

/--,

--I

mandating disclosure were enacted. This case seeks to certify a class of
thousands of consumers who were called by inmates between 1996 and
2000, but who were not provided the statutorily-required disclosures.
The court of appeals affirmed the trial court's dismissal of
plaintiffs' complaint, concluding that the statutes did not provide a cause
of action under the CPA independent of regulations promulgated by the
Washington Utilities & Transportation Commission (WUTC). Because
those regulations exempted these defendants from all discIosures-despite
the fact that they fell within the statutory definition of an AOS companythe court held that plaintiff could not state a claim for violation of the
CPA.

Under this holding, a consumer must first institute a review

proceeding under the Administrative Procedure Act (APA) in order to
assert a cause of action under the CPA for violation of statutory disclosure
requirements. We do not think that the Legislature would have imagined
that, 14 years after it enacted mandatory disclosure laws, a court would
hold that a large group of telecommunications companies providing AOS
service were exempt from all such disclosures for the first 11 years of the
statutes' existence. This issue is of substantial public interest not only to
the thousands of putative class members in this case, but to thousands of
other Washington citizens who have used defendants' services to place
long-distance calls through public telephones.
The second issue presented for review concerns plaintiffs' ability
to challenge WUTC regulations and regulatory action through this lawsuit.
When the WUTC issued regulations fleshing out the requirements of the
Disclosure Statutes in 1991, it exempted an entire subclass of AOS

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companies from the disclosure requirements. The exempted entities are
known as local exchange companies (LECs).

All three defendants-

appellees fall within this subclass. Later, in 1999, the WUTC granted
waivers to defendants Qwest and Verizon from a new regulation requiring
disclosure of LECs. The. WUTC exempted these companies despite the
fact that LECs fit squarely within the statutory definition of "alternate
operator services company."
Although the WUTC's exemption of LECs was facially
inconsistent with the statute, the court of appeals held that plaintiffs could
not challenge the validity of the WUTC regulations or waivers.

reasoned that plaintiffs were first required to institute a review proceeding
under the state Administrative Procedure Act. This holding conflicts with
this Court's decision in Manor v. Nestle Food Co., 131 Wn.2d 439, 932
P.2d 628 (1997), a non-AP A personal injury case in which the Court
determined the validity of a regulation issued by Department of Labor &
Industries. If the published opinion of the court of appeals is allowed to
stand, it will cut off potentially meritorious challenges to agency
regulations whenever that issue arises in a non-AP A review proceeding.
This is an issue of substantial public interest.
By footnote, the court of appeals rejected plaintiffs' arguments on
the merits of the WUTC's regulation and waivers. It reasoned that the
Disclosure Statutes were never aimed at defendants, which the court noted
were heavily regulated and were already filing their rates via tariffs. The
Disclosure Statutes, however, do not distinguish between LECs and nonLECs. Indeed, the Legislature's definition of AOS company expressly

)

includes the defendants in this case. The WUTC's exemption of LECs
from disclosure requirements impermissibly alters a statutorily-defined
tenn. If left intact, the court of appeals' opinion will prevent thousands of
Washington citizens from obtaining the redress the Legislature determined
they should have when a telephone company fails to provide appropriate
rate disclosure.

THE DISCLOSURE STATUTES SET A MINIMUM FLOOR
OF DISCLOSURE THAT IS ACTIONABLE IN Tms CASE;
DISCLOSURE BY TARIFF Is NOT CONSISTENT WITH
LEGISLATIVE INTENT.

The Statutory Framework.

In 1988, the state Legislature acted to require companies providing
long-distance operator services at public telephones to disclose rates. See
RCW 80.36.510, .520, and .530.
The legislature finds that a growing number of companies
provide, in a nonresidential setting, telecommunications
services necessary to long distance service without
disclosing the services provided or the rate, charge or fee.
The legislature finds that provision of these services
without disclosure to consumers is a deceptive trade
practice.
RCW 80.36.510.
These disclosure requirements were specifically imposed on
"alternate operator service companies":
The utilities and transportation commission shall by rule
require, at a minimum, that any telecommunications
company, operating as or contracting with an alternate
operator services company, assure appropriate disclosure to
consumers of the provision and the rate, charge or fee of
services provided by an alternate operator services
company.

RCW 80.36.520.

--)

The Legislature was precise m identifying the

companies that were required to disclose rates to consumers. "Alternate
operator services company" is defmed as follows:
For the purposes of this chapter, "alternate operator
services company" means a person providing a connection
to intrastate or interstate long-distance services from places
including, but not limited to, hotels, motels, hospitals, and
customer-owned pay telephones.
WAC 80.36.520. There is no dispute that prisons are among the places
covered by the statute. See WAC 480-120-141(2)(b). Collect calls from
prisons require the "connection" described in the statute.
The Legislature sought to give the statute some teeth by making a
violation of these provisions a per se violation of the CPA:
In addition to the penalties provided in this title, a violation
of RCW 80.36.510, RCW 80.36.520, or RCW 80.36.524
constitutes an unfair or deceptive act in trade or commerce
in violation of chapter 19.86 RCW, the consumer
protection act. Acts in violation of RCW 80.36.510, RCW
80.36.520, or RCW 80.36.524 are not reasonable in relation
to the development and preservation of business, and
constitute matters vitally affecting the public interest for
the purpose of applying the consumer protection act,
chapter 19.86 RCW.
RCW 80.36.530.
During the time period covered by this lawsuit (1996 to 2000),
operators employed by defendants did not disclose the rate or charge for
inmate calls.! CP 5. Nor did the operator provide any information on how
to obtain the applicable rate. Id. The recipient of an inmate call was
!

Rates for some interstate calls were disclosed starting sometime in 1999.

CP 5.

given two choices: (1) accept the call without any disclosure of rate
infonnation; or (2) hang up. ld.
2.

The Disclosure Statutes Create A Caus.e Of
Action Under The CPA.

RCW 80.36.530 states that a "violation" of RCW 80.36.510 and
.520 "constitutes an unfair or deceptive act in trade or commerce in
violation of chapter 19.86 RCW, the consumer protection act ..." The
substantive provision of section .510 that may be violated is the statement
that the provision of long-distance services "without disclosure to
consumers" is a deceptive trade practice. RCW 80.36.530 also refers to a
"violation" of section .520. Section .520 provides a minimal floor of
disclosure and requires the WUTC to flesh out disclosure requirements in
more detail.

What is clear is that, under sections .520 and .510, no

disclosure cannot be "appropriate disclosure."
Despite the statutory references to a "violation" of section .520 and
.. 510 and the point-blank statement in section .510 that the provision of
long-distance services "without disclosure to consumers" is a deceptive
trade practice under the CPA, the court of appeals held that the Legislature
did not create a cause of action for failure to disclose, only a cause of
action for failure to comply with yet-to-be-adopted WUTC regulations.
As the dissent points out, this holding fails to give effect to the
Legislature's statement that "provision of these services without
disclosure to consumers is a deceptive trade practice." RCW 80.36.510.
We agree with the majority's conclusion that the Legislature directed the
WUTC to promulgate regulations fleshing out disclosure requirements.

But this does not mean that a company can utterly fail to provide
disclosure for over ten years when the statute states that a failure to
disclose is a deceptive trade practice. The most reasonable reading of this
remedial legislation is that the Legislature required some form of
disclosure but left the specifics up to the WUTC. A complete failure to
disclose is still a violation of the statutory directive that "provision of
these services without disclosure to consumers is a deceptive trade
practice." RCW 80.36.510. Total failure to disclose is actionable and
consistent with the language and intent of the statute.
3.

Disclosure By Tariff Is Inconsistent With
Legislative Intent.

In footnote 11, the court of appeals contends that the defendants
had "already appropriately disclosed rates"--even before the enactment of
the Disclosure Statutes. Appx., A-1l-12 n. 11. This occurred, said the
court, when defendants filed tariffs under RCW 80.36.100 and the

WUTC

determined the rates were just and reasonable. Id. According to the court
of appeals, plaintiffs failed to "take into consideration" this pre-existing
regulatory scheme. Id.
The court of appeals is wrong. All companies providing AOS
services, including non-LEC telecommunications companies, were
required to and did file tariffs prior to the passage of the Disclosure
Statutes. See Appellants' Opening Bf., pp. 36-37; Reply Bf., pp. 3-7.
(citing RCW 80.36.100, which requires all telecommunications companies
to file tariffs). The Legislature is presumed to have known this fact.
Because all providers of AOS services were "disclosing" their rates

pursuant to tariffs when the Legislature identified the problem, the
Legislature must have concluded that disclosure by tariff was not an
acceptable solution to the problem. This makes sense. No one who has
ever attempted to get their hands on a tariff, much less understand one,
knows that it is not a workable means of communicating information to
the general public. Accordingly, the "appropriate disclosure" required by
RCW 80.36.520 is a type of disclosure that is more accessible, more
immediate, and more practical than disclosure by tariff.
The court of appeals recognizes that disclosure by tariff is "likely a
legal fiction." Appx., A-II n.1I. The Legislature was not concerned with
fictions, however; it was concerned with the' practical dissemination of
information to consumers that would allow them to make informed
choices. If disclosure by tariff had been deemed a sufficient consumer
protection by the Legislature, there would have been no need to pass any
legislation because such disclosure was already mandated by law.
The structure of the Disclosure Statutes supports the conclusion
that the Legislature intended a minimal floor of disclosure that would
allow consumers to obtain rate information more quickly and more easily
than by entering the arcane world of telecommunications tariffs. First, the
Legislature identified a problem--companies were providing AOS
services "without disclosing the services provided or the rate, charge or
fee." RCW 80.36.510. The Final Bill Report pinpoints the problem: "the
customer is often unaware of the charge until it appears on the monthly
bill." Senate Bill Report, SB 6475, Opening Bf. Appx., 6-1.

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Rather than import legal fictions that ordinary consumers know
nothing about, the Legislature intended to require AOS companies to
provide a form of disclosure that would arm consumers with information
they could use at the critical point in time that they need it: when they are
making (or receiving) a call.
The court of appeals' conclusion that "disclosure by tariff'
satisfies the statutory requirement of "appropriate disclosure" is premised
on a misreading of legislative intent. The court erroneously states that the
Disclosure Statutes were aimed at "new" companies that did not file
tariffs. Appx., A-7 ("The legislation was prompted by a growing number
of non-regulated companies that were popping up to provide
telecommunication services necessary to long distance service. . . .
[T]hese 'new' telephone companies were unregistered with and
unregulated by the WUTC.") This statement is factually incorrect. As
noted above, all AOS companies were required to file tariffs. Moreover,
nothing in the statutes or legislative history supports a distinction between
LECs and non-LECs or suggests that the Legislature believed disclosure
by tariff was acceptable.
The court of appeals' reasoning is flawed for another reason. The
Disclosure Statutes are concerned with two forms of disclosure-rate
disclosure and identification of the company providing AOS services
("branding").

Tariffs cannot accomplish the goal of identifying the

company that provides AOS services for a particular call. That type of
disclosure can take place only at the time a specific call is made using a
specific AOS company.

In sum, the Legislature permitted the WUTC to set the precise

level of disclosure, but it did not permit the WUTC to conclude that the
statutory "minimum" required by RCW 80.36.520 was a form of
disclosure that the Legislature had already found to be deficient. Under
these circumstances, one need not consult a regulation to determine that a
CPA violation has occurred.
C.

A COURT MAy DETERMINE THE VALIDITY OF A
REGULATION IN A NON-APA REVIEW PROCEEDING.

Before we address the substance of the WUTC regulations under
the Disclosure Statutes, a threshold question must be answered: May a
.court hear a challenge to the validity of a regulation outside the confines
of a review proceeding under the Administrative Procedure Act (APA)?
The court of appeals, citing RCW 34.05.510 and Manor v. Nestle Food
Co., 131 Wn.2d 439,932 P.2d 628 (1997), answered in the negative.
The court of appeals' reliance on Manor is misplaced-it supports
plaintiffs' position.

Manor was a personal injury case, not a review

proceeding instituted under the AP A. The Manor court did not refuse to
hear a challenge to the validity of a regulation; it entertained extensive
arguments on the validity of a regulation issued by the Department of
Labor and Industries. The agency (L&I) never appeared in the case.
The Manor case is like this case: plaintiff brought a civil action
for damages that required the court to interpret a statute and determine the
validity of a regulation. The court relied on the analytical framework of
the AP A to determine whether the regulation was valid, posing some of
the same questions that plaintiffs pose here:

Did the rule exceed the

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statutory authority of the agency? Was the rule arbitrary and capricious?

See id. at 453-54. The court of appeals appears to have confused the
Manor court's application of APA standards of judicial review with the

separate concept of adjudication through an AP A review proceeding. The
former need not entail the latter.2
The court of appeals ruling purports to shut the door on review of
agency regulations in non-AP A proceedings.

This creates a serious

conflict among Washington appellate decisions and engenders uncertainty
in an important area of the law. Review should be granted.
Review should also be granted because the court of appeals
misapplied the statutory exception to exclusive AP A review. RCW
34.05.510(1) provides that an APA review proceeding is unnecessary
where "the sole issue is a claim for money damages or compensation and
the agency whose action is at issue does not have statutory authority to
determine the claim."
This case fits the exception. First, plaintiffs have asserted a CPA
claim for money damages. While plaintiffs' complaint contains a claim
for injunctive relief, that claim is moot. Plaintiffs made this observation in
the trial court and offered to withdraw the claim. CP 216.

2 Manor is not the only Washington case involving a challenge to the validity
of an agency rule in a non-AP A review proceeding. The court of appeals
decision conflicts with other Washington case law. See Bird-Johnson Corp. v.
Dana Corp., 119 Wn.2d 423, 428,833 P.2d 375 (1992); State v. Thompson, 95
Wn.2d 753, 759, 630 P.2d 925 (1981); Gugin v. Sonico, Inc., 68 Wn. App. 826,
831,846 P.2d 571 (1993); Ward v. LaMonico, 47 Wn. App. 373,379, 735 P.2d
92 (1987).

... -.-- .....

-j

It is no answer to say, as the court of appeals did, that plaintiffs

"never moved to withdraw that portion of her claim." Appx., A-13. This
is a 12(b)(6) motion.

A motion to dismiss "should be denied if the

plaintiff can assert any hypothetical factual scenario that gives rise to a
valid claim, even if the facts are alleged informally for the first time on
appeal." Fondren v. Klickitat County, 79 Wn. App. 850, 854 (1995).
Independent of any suggestion or motion from plaintiffs, the trial court has
a duty to determine whether the complaint can be saved through
amendment.

See 5A Charles A. Wright & Arthur R. Miller, Federal

Practice & Procedure § 1357, p. 339 (2d ed. 1990).

The fact that

plaintiffs did not file a separate motion to amend the complaint is not
dispositive.

See Seattle Professional Photographers Ass'n v. Sears

Roebuck Co., 9 Wn. App. 656, 661, 513 P.2d 840 (1973) (trial court erred
in failing to allow amendment to delete claims where request made in trial
brief; appellate court deemed complaint

amended when reviewing

dismissal for failure to state a claim).

Second, the WUTC does not have the statutory authority to
determine whether the CPA has been violated.

The WUTC has no

authority to award damages, attorney fees, or costs under the CPA, or to
provide any relief directly to individual consumers other than refunds of
certain charges.
Finally, the court of appeals' reliance on Department of the Army

v. Blue Fox, Inc., 525 U.S. 255 (1999) is misplaced. The court's cursory
analysis of the case implies that there is a parallel provision in the national
APA with a similar "money damages" exception. See Appx., A-13. That

~,~I

)

is not the case. The APA provision construed in Blue Fox concerns the
circumstances under which the federal government waives sovereign
immunity.

525 U.S. at 260-61.

It has nothing to do with the

circumstances under which a challenge to an agency rule may be heard in
a non-APA review proceeding. The two statutes are not remotely parallel.
Even if they were, the court of appeals has misstated the holding in
Blue Fox. The Supreme Court did not hold that plaintiffs claim for an

equitable lien took it outside the "money damages" exception to the
federal AP A statute. It held the opposite: the claim was merely a means
to the end of satisfying a claim for the recovery of money and therefore
came within the "money damages" language, thus precluding the lawsuit
on sovereign immunity grounds. Id. at 262-63. In short, the court of
appeals' application of the law is misguided and its description of the
holding in the case is wrong.
This Court can and should grant review to make it clear that the
validity of an agency regulation may be challenged in the circumstances
present here.
D.

THE WUTC's 1991 REGULATION AND ITS DECISION To
GRANT WAIVERS FROM ITS 1999 REGULATION
CONFLICT WITH THE DISCLOSURE STATUTES.

If, as demonstrated above, a court may properly entertain a
challenge to the WUTC regulations in this case, the question becomes
whether defendants' reliance on those regulations is misplaced because
they conflict with the statute they purport to implement. The content of
the 1991 and 1999 regulations and the WUTC's decision to grant waivers
to Qwest and Verizon exempting these defendants from compliance with

)

_ .

the 1999 regulation are described in the court of appeals opinion and in
plaintiffs' briefing in the court of appeals. See Appellants' Opening Bf.,
pp. 8-12; Reply Bf., pp. 13-15. Below, we describe why review should be
granted on the issues of: (1) whether the WUTC's decision to exempt
defendants from all disclosure obligations in the 1991 regulation is void
because it conflicts with the Disclosure Statutes; and (2) whether the
WUTC exceeded the statutory scope of its authority in granting waivers
from the 1999 regulation.
1.

The 1991 Regulations Conflict With The
Disclosure Statutes Because They Alter A
Statutorily Defined Term.

It is axiomatic that an agency may not amend unambiguous

statutory language. Caritas Serv., Inc. v. Department of Social & Health
Serv., 123 Wn.2d 391, 415,869 P.2d 28 (1994). It is equally fundamental
that the statutory definition of a term "controls its interpretation." Senate
Republican Campaign Comm. v. Public Disclosure Comm 'n, 133 Wn.2d
229,239,943 P.2d 1358 (1997).
Statutory definitions of words used elsewhere in the
same statute furnish official and authoritative evidence of
legislative intent and meaning, and are usually given
controlling effect. Such internal legislative construction is
of the highest value and prevails over executive or
administrative construction and other extrinsic aids.
State v. Leek, 26 Wn. App. 651, 655, 614 P.2d 209 (1980) (emphasis
added)

(quoting

Sands,

STATUTES

AND

STATUTORY

CONSTRUCTION § 27.02 at 310 (4 th ed. 1972)).
The Disclosure Statutes explicitly define the term "alternative
operator services company." RCW 80.36.520. That definition is clear. It

-j

plainly includes local exchange carriers-like the. three defendants on
appeal-who choose to provide "a connection to intrastate or interstate
long-distance services" from prisons.
It is equally clear that the definition of "alternative operator

services company" in the 1991 regulation is facially

inconsistent~

and

conflicts with, the statutory definition. The conflict is striking becauseexcept for the exemption of LECs in the regulation-the regulatory
definition tracks the statutory defmition. Both define AOS companies as
those companies "providing a connection to intrastate or interstate longdistance services." The only difference is the addition ofthe phrase "other
than a local exchange company" in the regulation. Compare WAC 480120-021 (1991) with RCW 80.36.520.
The definition of AOS in the statute is plain and unambiguous and
must be given effect. The exemption of LECs in the 1991 regulation
directly conflicts with the express statutory definition and is therefore null
and void. See State v. Dodd, 56 Wn. App. 257, 260-61, 783 P.2d 106
(1989).
The court of appeals did not grapple with the conflict between the
statute and the regulation. Instead, it held no conflict existed because: (a)
defendants were already required to disclose rates by tariff (an argument
addressed above); and (b) the WUTC exercised appropriate discretion in
exempting LECs because "it was the non-local exchange companies that
the Legislature pointed to as the problem companies charging higher
rates." Appx., A-14 (emphasis in original).

r---."'\

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The court of appeals does not cite to any authority for this latter
proposition. There is none. One can search the· statutes and legislative
history in vain and find no distinction between LECs and non-LECs. The
Legislature directed the WUTC to develop disclosure requirements for

"any telecommunications company, operating as or contracting with an
alternate operator services company." RCW 80.36.520. Use of the word
"any" indicates that the Legislature contemplated disclosure requirements
that would apply uniformly to all providers of operator services, and that
sub-classes of AOS companies could not be carved out of the statutory
definition.
The majority opinion also fails to grapple with the fact that the
Legislature twice rejected LEC-sponsored attempts to amend the
Disclosure Statutes to exempt LECs from disclosure obligations. See
generally Appellants' Reply, pp. 11-13. In 1990, the Legislature rejected

an attempt to amend RCW 80.36.520 that would have redefined AOS
company by inserting the language "other than a local exchange
company." Reply Appx. at 0042.

Later that year, it rejected another

proposed amendment, lobbied for by US West (now Qwest), that would
have exempted LECs from the statutory definition in RCW 80.36.520.
See id. at 0059; 0061-63. Instead, the Senate unanimously passed a bill

that relied on the existing statutory definition of AOS company. ld. at
0053 (now codified at RCW 80.36.522 and .524). This legislative history
confirms what is plain in the statute:
providers of AOS services to disclose rates.

the Legislature intended all

-I

The lobbying efforts of the LECs were more successful with the
WUTC.

When drafts of the 1991 regulation were proposed, an LEC

exemption was debated and generated a heavy volume of comments. The
WUTC staff then recommended that LECs not be exempted. See id. at
0068-76; 0081.

Staff explained its rationale:

"Staff is generally

persuaded that the exclusion should not be allowed, in order to assure that
the public informational requirements for AOSs and aggregators are
standard throughout the state." Id. at 0079.
The LECs complained loudly. After a second round of comments
were received, WUTC staff continued to recommend a version of the
regulation that tracked the statutory definition and did not exempt LECs.

Id. at 0107; 0098. In sticking with its recommendation that LECs be
included in the definition, WUTC staff reasoned: "The chief benefit from
including LECs in this definition would make performance more
consistent among all providers-particularly regarding branding-and
thus less confusing to consumers." Id.
One week later, the WUTC reversed course and put the exemption
in its final regulation. Id. at 0123; 0125. The WUTC's rationale for
exempting LECs does not address the conflict with the statutory definition
of AOS company. Because the regulatory definition can be measured
against a specific statutory provision, deference is inappropriate. Where
the statutory definition is clear, that is the end of the matter. See Chevron,
Inc. v. Natural Resources Def. Council, 467 U.S. 837, 842-43 (1984).

The WUTC Exceeded The Statutory Scope Of Its
Authority In Granting Waivers.

The waiver issue turns on the same considerations addressed
above. In 1999, the WUTC issued a new regulation that eliminated the
LEC exemption in the 1991 regulation. It nevertheless granted waiver
petitions exempting Qwest and Verizon from disclosure obligations.
It is worth repeating the controlling statutory language:

the

WUTC "shall by rule require, at a minimum," that "any" company
"operating as or contracting with" an AOS company "assure appropriate
disclosure to consumers." RCW 80.36.520. Deference to agency action is
not an issue where the agency has failed to comply with a mandatory duty
that on its face admits of no exceptions.
E.

THE COURT OF ApPEALS ERRED IN DISMISSING
CENTURYTEL ON ALTERNATE GROUNDS.

The court of appeals dismissed defendant CenturyTel on the
alternate ground that "a review of the record" indicates CenturyTel never
provided long-distance service to inmates. Appx., A-16. To the extent
this holding relies on declarations submitted by CenturyTel after the trial
court had dismissed plaintiffs' claims under CR 12(b)(6), it is
procedurally erroneous. By definition, a Rule 12 dismissal is based solely
on plaintiffs' pleadings.

Plaintiffs' complaint clearly alleges that

"defendants, all telecommunications companies and operator service
providers, have failed to assure appropriate disclosure of rates to the
plaintiffs and other similarly situated, and continue to fail to do so for
intrastate long-distance telephone calls." CP 2,

see CP 3, ~ 10; CP 5, ~ 16.

6 (emphasis added);

To the extent that the dismissal is based' on the contract that
CenturyTel signed (and which was attached to the complaint), it reflects
an erroneous reading of the contract. The first page of the contract states
that the defendants will provide "inmate telephone stations and enclosures,
recording and monitoring equipment and local and intraLATA telephone
service." CP 339. IntraLATA service may be purely local service, but it
may also be long-distance service when a call is placed between two
different exchanges. See Washington Independent Tel. Ass 'n v. TRACER,
75 Wn. App. 356, 358-59, 880 P.2d 50 (1994).

Here, the contract
"

distinguishes between "local" and "intraLATA" service and indicates that
defendants will provide both.

This suggests that all defendants were

required to provide long-distance intraLATA service. At the very least,
this language creates an issue of fact to be construed in plaintiffs' favor.
VI. CONCLUSION

The court of appeals has published an opinion filled with factual
and legal errors that conflicts with appellate opinions in this state on
issues of substantial public interest. Petitioners ask this Court to grant
review and re:verse the trial court's judgment dismissing this case with
directions to remand for further proceedings.
RESPECTFULLY SUBMITTED this

{1-

~
4

day of May, 2003.

P. Meier, WSBA #19991
ys for Petitioners

CERTIFICATE OF SERVICE

I certify, under penalty of perjury pursuant to the laws of the
United States and the State of Washington, that on May 14, 2003, a true
copy of the foregoing PETITION FOR REVIEW was served upon counsel of
record by legal messenger, addressed as follows:

[ ]
[x]
[ ]
[ ]

By United States Mail
By Legal Messenger
By Federal Express
By Facsimile
Fax:
(206) 386-7500
Phone: (206) 624-0900

Robert B. Mitchell
Carol S. Arnold
Athan E. Tramountanas
PRESTON GATES & ELLIS LLP
925 Fourth Avenue, Suite 2900
Seattle, W A 98104
Attorneys for Defendants
CenturyTel Telephone Utilities, Inc. and
Northwest Telecommunications, Inc.

[ ]
[x]
[ ]
[ ]

By United States Mail
By Legal Messenger
By Federal Express
By Facsimile
Fax:
(206) 623-7022
Phone: (206) 623-7580

Kathleen M. O'Sullivan

[ ]
[x]
[ ]
[ ]

By United States Mail
By Legal Messenger
By Federal Express
By Facsimile
Fax:
(206) 583-8500
Phone: (206)264-6375

Timothy J. O'Connell
STOEL RIVES LLP

600 University Street, Suite 3600
Seattle, WA 98101
Attorneys for Defendant
GTE Northwest, Inc.

PERKINS COlE LLP

1201 ThirdAve.,F1.40
Seattle, W A 98101
Attorneys for Defendant
U.S. WEST Communications, Inc.

DATED this

It"- day of May 2003, at Seattle, Washington.

, Appendix

••
': "
',
:J

" t',\
'

... , ..
:' .....
~

•

'.~

•

,. f

RECEIVED'
A.?R l' 5 l003
~~~

MslffgPObNEMORE

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON'
SANOY JU'DD, TARA HERIVEL, and
ZURAYA WRIGHT, for themselves, and "
on behalf 01 all similarly situated persons,
Appellants,

)
)

)'
,)
)
).
)
)

AMERICAN TELEPHONE AND TELEGRAPH )
COMPANY;
)
)
Defendant,
)
)
).
,GTE NORTHWEST, INC.; CENTURYTEL
TELEPHONE UTILITIES, INC.; NORTHWEST )
TELECOMMUNICATIONS, INC., dib/a PTI
)
)
COMMUNICATIONS, INC.;U.S. WEST
, COMMUNICATIONS, INC.;
)
)
)
Respondents,
)
)
T-NETIX, INC.,

No. 48075-8..1
DIVISION ONE

PUBLISHED OPINIQN
FILED:

IPR~ 14 2003

)
Defendant.

)

)
GROSSE, J. - The Legislature created a statutory scheme for the regulation of
alternate operator service companies. It included a cause of action against providers of
telecommunications services for violation of the' Consumer Protection Act to assure
appropriate disclosure of telephone rates. However, the Legislature did so only for
violations of the regulations promulgated by the Washington Utilities and Transportation
A-1

.' ~

.,:

\.l t :J : . . ~;1;: .~:~

48075-8-1/2 ..

C~:)rntnis.sion. Further, the Le·gislature pree'!lptedarJY direct action· against the phone
companies. The decision of the trial court is affirmed.

FACTS
Sandy Judd, Tara Herivel, and Zuraya Wright, h.ereafier collectively referred to
as Judd, brought an action against five telecommunications providers seeking injunctive
relief and· damages, including damages for violation of Washington's Consumer
Protection Act (CPA).1 The suit is based on the alleged nondisclosure of. telephone
rates to those accepting long distance collect· calls placed by inmates housed .in
Washington State correctional facilities.

Sandy Judd·and Tara Her-ivel received and

paid for intrastate long distance collect calls from prison inmates in Washington State.
Zuraya Wright received and paid for interstate long distance collect calls from a
Washington State prison inmate. 2
As argued by Judd, the appeal primarily involves a question of whether the
phone companies assured the sufficient and appropriate disclosure of rates charged to
!

consumers for services provided while conneCting both intrastate. and interstate long
distance calls from the correctional facilities. We note, as did the trial court, that in
doing so, Judd challenges the legitimacy of the Washington Utilities and Transportation

1RCW 19.86 et seq.
2The case was brought, but never certified, as a class action for those persons
who have been called by inmates at any time since June 20, 1996.

-2-

A-2

....

4807508-113

",.:

, .' Commission (WUTC) regulations, withQut. resorting ·to the Administrative Procedure Ace.
.

or making the WUTC?· a· party to' the action. .
'. The respondents are three of the five telephone companies sued. U.S. West
Communications, Inc~ (now Owest Corporation, hereinafter Owest); GTE Northwest,
Inc. (now Verizon Northwest,. Inc:, hereinafter Verizon); and CenturyTel Telephone
Utilities, Inc. and Northwest Telecommunications, Inc. d/b/a PTI Communications, Inc.
(now both known as CenturyTel Telephone Utilities, Inc., hereinafter CenturyTel),
collectively called the phone companies or by their current monikers.
Judd's amended complaint alleges that the phone companies failed to make the
rate disclosures required under the 'alternate operator services disclosure statute, RCW

80.36.520.

In that statute, the Legislature directed the' WUTC to establ.ish rules to

require the "appropriate disclosure" of rates of certain phone service providers. The
'statute provides:
The utilities and transportation commission shall by rule require,at a
minimum, that any telecommunications company; operating as or contracting
with an alternate operator services company, assure appropriate disclosure to
consumers of the provision and the rate, charge or fee· 'of s'ervices provided by
an alternate operator services company..
For purposes of this chapter, "alternate operator services. company"
means a. person providing a' connection to intrastate or interstate long-distance
services from places including, but not limited to, hotels, motels, hospitals, and
customer-owned pay telephones.

3Chapter 34.05 RCW.

-3-

A-3

· .'.

" 48075-8-1/4

, J'udd asserts, the phone comp'anles viorated the CPA by not making the re'qulred
disclosures. Judd sought damages under RCW 80.36.530" and also souglit InjlJnciive
relief. The complaint. does not allege that phone company rates were excessive; that
there was an incorrect method of calculation of the tates; or that the phone companies
·l·

':,,".

i' .

~.-.

and/or the Department of, Corrections conspired to obtain unreasonable profits.5

Further, Judd does not name the WUTC as a defendant, assert any claims against it, or
d'emand or seek action by it. This, despite Judd's argument" that the WUTC exceeded
its authority in promulgating its rules or in exempting the phone companies (as local
exchang~

companies) from the disclosure regulations, or by later granting limited and

temporary waivers to the phone companies regarding certain disclosure requirements.
Verizon was the first of the telephone companies to' respond to the complaint by
filing a motion to dismiss pursuant to CR 12(b)(6), arguing that Judd failed to state a
claim upon which relief could be granted. a On October 13, 2000, after a hearing, the

4RCW 80.36.530 provides that violations of alternate operator services rules are
violations of the CPA. The statute is set forth later in this opinion.
'
5Any allegations concerning excessive rates and profits were raised for the first
time on ,appeal, (Opening Brief of Appellants at 6 n.1), are inconsistent with Judd's
position below, and will not be considered by this court on appeal. See Bravo v. Dolsen
Cos. 125 Wn.2d 745, 750, 888 P.2d 147 (1995).
'
OVerizon's argument was based on the fact that RCW 80.36.520 did not impose
any direct obligation on it, but directed the WUTC to promulgate regulations. Even if
Verizon had a direct duty under the statute, Verizon argued it did not violate the WUTC
regulations regarding "appropriate disclosure" because it was exempted from them
before the 1999 amended regulations as a local exchange company, or was properly

-4 -

A-4

.....
.

- "

. 48075-8-1/5

.' trial cOurt· issued 'a "Partial Decision on Summary Judgm~nt arid Order for Further
\

Briafirig~" providing 'in part:

[R]eading the statute as a whole, th~ legislature ilitendecj to create a cause of
action under the Washington Consumer Protection Act ("CPA") only for violations "
of the regulations promulgated by the Washington Utilities and Transportation.
Commission ('WUTC") "and did' not create a cause of action for actions' beyond' pr
outside of the regulations.
The court held that Judd did not raise such violations but instead attacked the validity
and sufficiencyofthe'WUTC regulations, exclusions, and waiy·ers. For this reason, the .
court held that the telephone. companies were all entitled to dismissal from the action
",, unless Judd alleged the telephone companies violated WUTC. regulations. . The
court
.
'. deferred entry of any orders of dismissal for 10 days to allow Judd to file supplemental
briefing asserting violations of WUTC regulations. After the response deadline, the
court indicated it would entertain motions to dismiss, or stay the case and refer it to the
WUTC under the doctrine of primary' jurisdiction for a determination of whether a
violation occurred .
.Supplemental briefing was provided but it included 'no allegations of violations .of
WUTC regulation.

Thereafter the lower. court dismissed. Judd's claims against the

telephone companies with prejudice on multiple grounds. First, the court concluded.
that the alternate operator services disclosure statutes (RCW 80.36.510, .520, .524,

granted a waiver regarding the requirements. Further, Verizon correctly asserted that
Judd's claims were subject to primary jurisdiction of the WUTC.

-5-

A-5

..
"

48075-8-i/6

and' .530) and the WUTC reguh:itions 'created'thereunder set-forth

a cause

I,"

of action.

under the' CPA only for violations of the regulations promulgated in response to .the
. statutes. Second, under WUTC regulations the telephone companies' status as local
exchange companies was either exempted from compliance tinder the regulations or,
under later amended regulations that no longer provided exemptions for local exchange
companies, Veriton and Owest properly obtained waivers temporarily exempting them
.

.
.

from certain specific disclosure requirements. The trial court determined that the case:

was not the proper proceeding for Judd to challenge the WUTC's regulations or actions
as being beyond the scope of the agency's authority. The trial court determined that
such a challenge is appropriate only in a proceeding under the Washington
Administrative Procedure Act, citing RCW 34.05.510 ..
Additionally, as to CenturyTel only, the trial court took judicial notice of the fact
was deleted from the prison telephone providers Gontract
in February.
that CenturyTel
.
.
1997, and 'in any event had never. provided long distance services. to
facilities,only local service.

tne

correctional

The court based its ruling in part on this fact when it

entered judgment in favor of CenturyTel.
The telephone companies moved for entry of judgments pursuant to CR 54(b) on .
grounds there was no just reason for delay. Seeking an immediate appeal, Judd did
not object to entry of final judgments. Thereafter the trial court entered final judgments.

- '6 -

A-6

. ..
I

. "".

48075-8-117

. '-,:",

\',

,~udd appeals the decision~ of the trial COlirt She a~serts that a cl'airh, wa~ stated
under the CPA for violatlons of the disclosure statutes; that she is entitled:tQ challenge
the validity of the WUTC regulatJons through this action; that the ,WUTC exc~eded its
authority in exempting local exchange, companies from the statutory definition of
alternate operator services companies hi the 1991 regulation, and in the later grant of
,waivers to Owest and Verizon.' Finally, Judd asserts that the court should not have
partially based its decision on the determination that CenturyTel never' provided long
, distance service.
, DISCUSSION

In 1988, after the breakup of the Bell system, the

Legislat~re

enacted the first

component of the alternative operator services disclosure statutes. The legislation was
prompted by a growing number of non-regulated companies that were popping up to
provide telecommunication services necessary to long ,distance service "without
disclosing, the services provided or the rate, charge or fee." 7 ,Prior to the' 1988
, enactment these "new" telephone companies were unregistered With and unregulated
,by the WUTC.

Unlike these new companies, the WUTC possessed the power to

regulate local exchange companies, like the respondent telephone companies here.
See RCW 80.36.080, RCW 80.36.140.

7RCW 80.36.510.

-7-

A-7

- I- )

48075-8-1/8,

.. :'

In'1989, in resPonse'to the Leglshiture's manda~e, thtfWUTC promulgated WAC
-480-120-141., This rule i"!lposed limited disclosure requirements on alternate operator
services companies, but did not include the full contemporaneous disclosure of rates.
The rule was' amended in 1991'.

This amended rule clarified the' term "alternate,

operator service's company" by excluding local exchange companies from the definition.
~ormer

WAC 48<;>~120-141 (1991).

The WUTC explained the exclusion of local

exchange companies from the requirements'as follows:
Unlike LECs Vocai exchange companies], AOS [alternate operator services]
companies can be seen as entering and [exiting] markets at will. AOS
companies were the subject of specific legislative enactment. AOS companies
often charge higher rates than LECs, leading to 'consumer complaints.
Consumers often expect that they are using their LEC when they use a pay
phone; requirements that apply to non-LEC companies to inform the Consumer
that it is not the LEC are reasonable.
Washington State Register 91-13-078, at 106-07 (1991).

1.0'1988, as revised in 1990, the Legislature enacted RCW 80.36.530, which
provides: '
In addition "to the penalties provided in this title, a violation of RCW
80.36.510, 80.36.520, or 80.36.524 constitutes an unfair or deceptive act in trade
or commerce in' violation of chapter 19.86 RCW, the consumer protection
act. ... It. shall" be presumed that damages to the consumer are equal to the cost
of the service provided" plus two hundred dollars. Additional damages must be
proved.
In 1991, the WUTC imposed a, limit on the maximum rate to consumers for
providing alternate operator services by specific reference to the rates charged by
Qwest and American Telephone and Telegraph Company (AT&T). Former 'WAC 480- 8-

A-8

- .-}

.."
'

48075-8-1/9

1·20..14'1(1-1) (Supp. 1991). The WUTC also' indicated th~t dfsclosure was ret'iultetf by""
the arternate operator services companies "upon request." See fonner WAC 480-1'20141 (5)(iii)(a) (1991).

""In

1999," following" changes

guideline~"

and

rules

of the

Federal

Commuhications Commission, the WUTC modified the disclosure requirements. the
modified rules required:
Before an operator-assisted call, from an aggregator location may be
connected by a presubscribed OSR [operator service provider), the asp must
verbally advise the consumer how to receive a rate quote, such as by pressing a
specific key or keys,but no more than two keys, or by staying on the line....
This rule applies to all calls from pay phones or other aggregator locations,
includhlg prison phones, and store-and-forward pay phones or "smart"
telephones.
" Former WAC 4BO-120-141 (2)(b) (1999). These rev.isions made disclosure requirements
applicable to local exchange companies.

The 1999 revised rules imposed more

stringent disclosure requirements. But the revision of the regulations also allowed for
potential waivers by the WUTC." Verizon and Owest filed timely waiver petitions with
the WUTC alleging, among other things, that the technology to access the inforr-nation
required by the more stringent disclosure requirements had not been perfected.s

81n addition the waiver petitions or amended waiver petitions specifically
r~qu"ested a permanent waiver .of that portion of the rule requiring automatic rate
disclosure from the party originating the collect caU, When that call originates from an
inmate phone at a correctional facility." This" was requested based on concerns that
inmat.e access to live operators could result in fraud and harassment. The limited
duration permanent waivers were granted on the condition that the telephone
-9-

A-9

-I"~- }

-:~)

, ,,

4S075-8-1I10

. Judd argues· that RCW 80!3Et520 provides an
independent basis~ without any
.
reference to the WUTC ot its regulations; for her direct claim against the telephone
Companies for their failure to make' the disclosures. We· cannot accept this Claim.
RCW 80.36.510, entitled "Legislative finding," indicates its concern regarding the
proliferation' of the 'alternate operator services companies since the breakup of the Bell
system, and the rates those companies were charging. The Legis.lature found that the
provision of these s'ervicesWithout disclosure to cOhsumers was a deceptive trade
practice. This statute provides an introduction to legislative policy, and statutory policy
statements do not give rise to' enforceable rights in and of themselves. 9

It is the

statutory sections that follow the policy statement that provide the enforceability of
\

certain rights. As the. Final Bill Report of Senate Bill 6745[101 provides:
The Utilities and Transportation Commission is to require that the· provision and
the charge, fee, or rate of alternate operator services are disClosed appropriately
to consumers. Failure to disclose constitutes a violation of the Consumer
Protection Act.
The language of RCW 80.36.520 does not specifically require that telephone
'companies make contemporaneous disclosures.

A plain reading of the statute

indicates that the legislative requirement directed the WUTC to assure '~appropriate

companies have technology in place no later than the last quarter of 2000 to allow
recipients of. inmate initiated collect
calls to access rate information.
.
91n re Welfare of J.H., 75 Wn. App. 887, 891,880 P.2d 1030 {1994}.
10Effective June 9, 1988.
- 10-

A-10

.. '

48075-8-1/11

...

... disclosure" to. cOnsumers through promulgation of rules .. It is.wlthin the purvieW of the
WUTC to direct hoW, when, or to whom the disclosure is mad$.

Furthet, RCW

80.36.524 sets forth that th~ WUTC may adopt rules providing for the minimum service
.Ievels for telecommunications companies providing altern·ate operator services. .
In the statutory scheme, RCW· 80.~6.53b· sets forth that in addition to the
penalties provided in the act, a violation of RCW 80.36.510, .520, and ·.524·constitutes
violation of the CPA. We agree with the trial court that when these ~tatutes are read
. '. together, in order for there to be. a failure to disclose that is actionable under the CPA,
,.' the failure must violate the rules adopted by the WUTC. The trial court's interpretation
achieves the legislative goal of creating a CPA cause of action for failure to disclose
!ong distance alternate operator seryices rates consistent with the legislative finding of
RCW 80.36.510.

This interpretation properly places responsibility on the WUTC to

. promulgate rules requiring "appropriate disclosure" and "minimum service levels" in
accordance with RCW 80.36.520 and .524.11

11Additionally, Judd's argument does not take ·into consideration that the
. respondent telephone companies were local exchange companies already· subject to
regulation by the WUTC. See RCW 80.36.080 (rates, services, and facilities); RCW
80.36.100 (tariff schedules to be filed and open to public); RCW 80.36.140 (rates and
services fixed by commission, when). Of particular relevance here is that the WUTC
determines whether the rates of the telephone companies are just and reasonable. The
telephone companies are required to file their tariffs .. A tariff lists the rates, terms, and
. conditions under which service providers offer services to their customers. RCW
80.36.100; Allen· v. Gen. Tel. Co. of the Northwest, Inc., 20 Wn. App. 144·, 145,578
P .2d 1333 (1.978). Although this court recognizes that it is likely a legal fiction, once a

- 11 -

A-11

. ,,

'--'"

- !- )

48075:'8-1/12

To accept Judd's arguments woukt .require· this. court to rewrite three relatively
unambiguous statutes. This we cannot do;
Judd also claims the trial cOurt erred in concluding that the exclusive .means of
challenging the v~lidity of the regulations was a' proceeding. under the Administrative
Procedure Act. Again, Judd's argument misses the mark..
Judd acknowledges that ~his Case is an attempt to challenge the validity of the
WUTC regulations as exceeding the statutory authority of the agency but argues that it
is not a review proceeding under the Administrative Procedure Act. We disagree. The
A9ministrative Procedure Act, RCW 34.05.510,12 is the exclusive means of judicial
review of agency action.

The act governs challenges to the validity of agency

regulation. 13

. tariff has .been properly filed with and accepted by the WUTC, a consumer is
conclusively presumed to know the tariffs contents.
Hardy v. Claircom
.Communications .Group, Inc., 86 Wn. App. 488, 492, 937 P.2d 1128 (1997) (claims
. ba~Fred because company ctisC16se'd rates,.fn ta:riff) . · The"refore;l'the companies here have
already appropriately disclosed their rates.
12The relevant portions of RCW 34.05.510 include:
This chapter establishes the exclusive means of judicial review of agency
action, except:
(1) . The provisions of this chapter fqr judicial review do not apply to·
litigation in which the sole issue is a claim for money damages or compensation
and the agency whose action is at issue does not ·have statutory authority to
determine the claim.
13Manor v. Nestle Food Co., 131 Wn.2d 439, 445-46, 932 P.2d 628, 945 P.~d
'1119 (1997).

- 12 -

A-12

...

. '.
(

48075-8-1113

Of more'"'$erious concem'js Judd's: argument that her claims 'come within,the
~money d~mages only" exception of ,the Administrative Procedure' Act, RCW

34.05.510(1). We disagree with this claim for-

a couple of reasons.

First, the pleadings

technically belie the argument. Judd seeks injunctive relief as well as a claim of money
damages. 14 Although Judd claims she would forego the injunctive reiief, she has never
moved to withdraw that portion of her claim, only stating she would if necessary.
Additionally, Judd seeks specific statutory remedies of presumed damages' plus $200
and treble damages under the CPA. In a recent case regarding equitable liens against
'" the federal government, the United States Supreme Court held that in a case with a
similar type of prayer for relief, seeking more than "mere compensation," ,the prayer
took the action outside of any "money damages only" exception. 15 Regardless, the
damages prayed for here are necessarily for a violation of established agency rules and
Jl!dd does not claim any'violation of these rules.
'FlJrther, the.' renioY~1 of local_, ~xC:h;aNJ~99m'p~nies . ,from: the 199'1 alt~rnate
operator services disclosure regulations does not conflict with the disclosure provisions
of RCW 80.36.520.

RCW 80.36.520 requires the WUTC to assure appropriate

disclosure to consumers. At the time of the 1991 alternate operator services regulation,

141n her complaint Judd indicated that the plaintiffs and their class are entitled to
an injunction under RCW 19.86.090.
15See Oep't of the Army v. Blue Fox, Inc~, 525 U.S. 255, 260-61, 119 S. Ct. 687,
142 L. Ed. 2d 718 (1999).

- 13 -

A-13

..---,'.-

.n
f

.',

48075-8-1114

.
.
··Iocal exchange companies were· already required to disclose ·rates.
.'

The

issue ()f

determining what appropriate disclosure is, is exactly what the Legislature delegated

the WUTC. In its discretion, the W!JTC concluded that the, eXisting level of disclosure
. was appropriate, especially considering it was the non-local exchang·e companies that
the Legislature pointed to as the problem companies charging higher rates. Where the
Legislature specifically delegates to an administrative agency the power to make the
rules, there is a presumption that such rules are valid. 16
. For example; as to the later waivers allowed by the WUTC, the waiver granted to
Qwest reads in part as follows:
The Commission finds that this is a sound request sinGe the Company's
operated-assisted rates compare favorably to· other carrier's rates that serve
inmate phones. With the condition of providing the Commission·with a monthly
report outlining specific· action steps taken to ensure implementation of this
technology by year end, the Commission will grant the waiver, temporarily, of
WAC 480-120-141 (2)(b) until December 1, 2000 only as it applies to the receiver
of the collect call. .. .117]
"

This waiv~r tempararUy. relieved. Qwest;: and a similar waiver temporarily relieved
Verizon, from the requirement of oral disclosure of how to obtain a rate quote under the

16Weyerhaeuser Co. v. Dep't of Ecology, 86 Wn.2d 310, 314, 545 P".2d 5· (1976);
Armstrong v. State, 91 Wn. App. 530, 536-37,958 P.2d 1010 (1998).
170rder of Wash. Utils. & Transp. Comm'n Granting Full and Partial Temporary
Waiver of WAC 480-120-141 (2)(b), In re Request for Waiver of Admin. Rules for Qwest
Corp., No. UT-990043 (Sept. 27, 2000).

- 14 -

A-14

..
"

•

.,.
"

4807~8-1/15

.1999 regulation, but it.did not relieve the 'phone companies frpm the dutY to disclOse its
.

rates by tariff~
Judd cites the case of Rios v. Department of Labor &. Industries18 regar~ing the
limits of agency discretion in carrying out mandatory duties imposed by statute.. There
. the court distinguished between a mandatory duty: and the agen'cy'sproceduraJ'
discretion in. implementing the duty. The Rios case is distinguishable from this case iri .
at least two ways.

First, in Rios, pesticide handlers challenged the ,validity of a

Department of Labor & Industries' rule,. and also challenged the Departmenfs
subsequent failure to initiate additional rulemaking under the Administrative Procedure
Act. Here, unlike in Hios, Judd has failed to challenge either the validity of the WUTC
rules or its. failure to initiate rulemaki~g under the Administrative Procedure Act.
Second, as explained in Rios, under the rules.of the Washington Industrial Safety and
Health Act of 1973,19 the Department has a mandatory duty to adopt a safety regulation
after it i.nvestigates and compites evid~ce that.a .ptopo~ed i~gulation is appro~riate.
Upon obtaining such evidence, the Department of Labor & Industries no longer has
discretion, it must adopt a safety regulation. But here, the alternate operator services
statute has no similar language removing discretion from the WUTC.

18Rios v. DeD't of Labor & Indus., 10'3 Wn. App. 126, 5 P.3d 19 (200'0'), affd in
part, rev'd in part, 145 Wn.2d 483,39 P.3d 961 (20'0'2) .
.19Chapter 49.17 RCW ..

- 15 -

A-15

,.. ..
t,

-;"r

\ )

48075-8-111'6

", .:~ "

The mandatory duty placed' on_ the' 'WUTC' ,is that it adopt' rules regarding

appropriate disclosure.' What was in fact "appropriate" was left
WUTC.

to the discretion of the

The WUTC did not .compile evidence that these phone companies

inappropriately charged the consumer. In fact, the opposite was true. If Judd d-e'sired
to challenge the validity of the rules or wanted to sue. to compel the WUTC to
promulgate additional rules then she should have brought the WUTC into the suit.
. Even if WUTC regulations are determined to be invalid, the telephone
companies' good faith' reliance on the validity of the regulations would likely be a
(

defense to Judd's claims for damages 'in any subsequent proceeding. 20
Finally. Judd claims the trial court erred in dismissing claims' against CenturyTel
based, in part, on a determination that CenturyTel provided only local service and never
provided long distance service. A review of the record supports the fact that neither PTJ
Communications, Inc., nor CenturyTeJ provided long distance telephone or long
.

, distance oper~tor services. with· respect

.Washington· State prison inmates.

PTI

. Communication, Inc.'s role as a subcontractor to AT&T was limited to local telephone
service.

20Soo Donaldson v. United States DeD't of Labor, 930 F.2d 339, 345 n.10 (4th
Cir. 1991); Goodman v. McDonnell Douglas Corp., 696 F.2d 800, 809 (8th Cir. 1979).

- 16 -

A-16

..
•

•

n
-'

48075-8~i/17

..
The de~ision,ofthe trial Col:lr'f.is'afflrmed.

WE CONCUR:

.",r~..

•

':':

'.'

.:'

- 17 -

A-17

. Judd, et-al. v. GTE Northwest, et al.,· No. 48075-8-1
APPELWICK, J. (Dissenting in part) ...;. The majority opinion states .that RCW
80.~6.51 0 merely provides an introduction to legislEitive policy that does not give rise to
.

entorc&able 'rights in and of themselves. Majority opinion at page 10. I must take issue
with·thi.s premise and the results which flow from it.
RCW 80.36.510, .520, and .530 were enacted as 'sections (1), (2), and (3)
respectively of chapter 91, La'Ns of 1998. They must be read togsth~r. RCW 80.36.. 530
states: "[A] violation of RCW 80.36.510 or 80.36.52(0] constitutes ... a violation of
·chapter.19.86 RCW, the consumer protection act ...." It goes on to provide a special
damages rule that is different from the general rule' stated in chapter. 19.86 RCW.
Subsequent amendments to chapter 19.86 RCW are of no consequence to this analysis
and will not be discussed here.
"'Statues must be interpreted and construed so that all the language used is
given effect, with no portion rendered meaningless or superfluous.'" City of Seattle v ..
State, 136 Wn.2d 693, 701, 965 P.2d 619 (1998) (quoting Whatcom County v.
Bellingham, 128 .Wn.2d. 537, 546, 909 P.2d 1303 (1996».

To give effect- to ~CW

80.36.530 requires that we read RCW 80.36~510 and .520 as creating rules which can
."

! ' : , . . ".~.

.. ,,::

". 'T... ~

•

be violated, triggering the penalties of RCW 80.36.530.
RCW

80.36.520

requires

the

Washington

Utilities

and

Transportation

Commission (WUTC) to adopt the rules. Any rule adopted bY,the WUTC must require a
company operating as or contracting with an alternative operator services .company
(AOSC) to make two disclosures at a minimum. The rule must require disclosure tit the
AOSC service and of the charge or basis of the charge to be made. Nowhere in RCW

A-18

•

'. " ,

-).

- No. 48075-8-1

- ·80.36.520 -does the language expressly ·impose a -substantive re·quirement dire·ctly on
.. -the telecommunication company. The WUTC :could violate this section by .failing- to
adopt rules, or by adopting rules which failed to conform to the statute~ However, no
one other than the WUTC could violate this section .

a violation of the rules promulgated by the
wutc pursuant·to·RC'ft"-~0.·3~.520· i~ a·.vioiatio~ of ·~haot~r ·19~86 RCW.· Y~t.'·both-th~:·
.- Clearly, -the Legislature did not say

trial court and the majority concluded that when the Legislature said, "in violation of
RCW 80.36.52?," it intended the consumer protection act to apply only to violations of
the rules once adopted pursuant to RCW 80.36.520 by the WUTC .. Such a reading is a
reasonable means to discharge the duty to give effect to that portion of ReV\! 80.36.530.
\

Since Judd had not alleged violation of these rules, she could not establish a ·consumer
. protection action by way of violation of RCW 80.36.520. I agree with that analysis. I
also agree she did not properly challenge the rules.·
While the majority· properly supplied an implied legislative intent relative to
agency rules to give effect to the cross-reference to RCW 80.36~520. it failed to give
.

1',

effect to the cross~reference. to RCW 80.36.510 .. RCW 80.36.510 provides:
The legislature finds that a growing number of companies provide, in a
nonresidential setting, telecommunications services necessary to long
distance service without disclosing the seryices provided or the rate,
charge or fee. The legislature finds that provision of these services without
disclosure to consumers is a deceptive trade practice.
This section says two things: (1) there is a growing problem with disclosure; and (2)
providing service without disclosure is a deceptive trade practice. The first sentence is

2
A-19

•

:No. 48075-8-1
a· factual ob~ervation within the legisl~tive. purview. Reading it without the words, "[t]he
legislature finds that, makes· clear the ·nature of the statement. Leave the same words
It

off the second sentence, and one readily observes that./the second sentence i~· a
statement of law; not a finding of fact: "provision of these services without disclosure to
consumers is a deceptive trade practice." RCW 80.36.510. If the trial court. mislabels a
Conclusion of law and

c~lIs

it a finding of fact, we would readily correct the label.. We

must do the same here. Only the second sentence of RGW 80.36.510 could give rise to
a violation.

We are bound to give it effect in order to avoid rendering the cross-

:reference in RCW 80.36.530 meaningless.
Clumsy or not, like the policy or not, this language is what the Legislature wrote.
We must give it effect. The result is that RCW 80.36.510 may be violated ~ndependent
of RCW 80.36.520. It may be violated by providing telecommunications services, in a
no~residential

setting, without disclosing the services provided or the rate, charge or

fee. .. Violation is a deceptive trade practice.

Penalties are available under Rf;W

80.36.530 and chapter 19.86 RCW.
Summary judgment was therefore improper on this issue.

Judd should have

been allowed to proceed to trial to attempt to prove violation of RCW 80.36.510 and to
recover damages consistent with such proof.
Therefore, I respectively dissent.

A-20

••

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}

80.36.520

TELECOMMUNICATIONS
having their phones blocked from acceSs to information delivery services.
(2) It is the intent of the legislature
that the .utilities and transportation
commission and local exchange companies, to the extent feasible, distinguish
between information delivery services
that are misleading to consumers, directed at minors, or otherwise objectionable and adopt policies and rules
that accomplish the purposes of RCW
80.36.500 with the least adverse effect
on information delivery services that
are not misleading to consumers, directed at minors, or otherwise objectionable." [1988 c 123 § 1.]
InveStigation and report by commission: "By October I, 1988, the commission shall investigate and report to the

committees on energy and utilities in
the house of. representatives and the
senate on methods to protect minors
from obscene, indecent, and salacious
materials available through the. use of
information delivery services. The investigation shall include a study of personal identification numbers, credit cards,
scramblers, and beep-tone devices as
methods of limiting access." [1988 c
123 § 3.]
Severability-198B c 123: "If any provision of this act or its application to
any person or circumstance is held invalid, the remainder of the act or the
application of the provision to other
persons or circumstances is not affected." [1988 c 123 § 4.]

Cross References
Information delivery services, see § 19.162.010 et seq.

Library References
Telecommunications (!;::>321,
322.
WESTLAW Topic No. 372.

321.1.

C.J.S. Telegraphs, Telephones, Radio,
and Television § 78.
.

80.36.510. Legislative fmding
The legislature finds that a growing number of companies provide, in a nonresidential setting, telecommunications services necessary to long distance service without disclosing the services
provided or the rate, charge or fee. The .legislature finds that
provision of these services without disclosure to consumers is a
deceptive trade practice.
[1988 c 91 § 1.] .

80.36.520. Disclosure o( alternate operator services
The utilities and transportation commission shall by rule require, at a minimum, that any telecommunications company, oper- .
ating as or contracting with an alternate operator services company, asstire appropriate disclosure to consumers of the provision
and the rate, charge or fee of services provided by an alternate
operator services company.
I
I

J...

For the purposes of this chapter, "alternate operator services
company" means a person providing a connection to intrastate or
interstate long-distance services from places including, but not

225

80.36.520

PUBLIC UTILmES

limited to, hotels, motels, hospitals, and customer-owned pay
telephones.
.
[1988 c 91 § 2.]
Library References
. Telecommunications e=311.
WESTLAWTopic No. 372.

C.J.S. Telegraphs, Telephones, Radio,
and Television §§ 79,85.

80.36.522. Alternate operator service companies-Registration-Penalties
All alternate operator service companies providing services with~
in the state shall register with the commission as a telecommunica~ions company before providing alternate operator serv.ices. The
commission may deny an application for registration of an alternate operator services company if, after a hearing, it finds that the
services and charges to be offered by the company are not for the
public convenience and advantage. The commission may suspend
the registration of an alternate operator services company if, after
a hearing, it finds that the company does not meet the service or
disclosure requirements of the commission. Any alternate operator
services company that provides service without being properly
registered with the commission shall be subject to a penalty of not
less than five hundred dollars and not more than one thousand
dollars for each and every offense. In case of a continuing offense,
every day's continuance shall be a separate offense. The penalty
shall be recovered in an action as provided in RCW 80.04AOO.
[1990 c 247 § 2.]
Library References
Telecommunications e=311.
WESTLAWTopic No. 372.

C.J.S. Telegraphs, Telephones, Radio,
and Television §§ 79,85.

80.36.524.· Alternate operator service companies-Rules
The commission may adopt rules that provide for minimum
service levels for telecommunications companies providing alternate operator services. The rules may provide a means for suspending the registration of a company providing alternate operatQr services if the company fails to meet minimum service levels or
if the company fails to provide appropriate disclosure to consumers of the protection afforded under this chapter.
[1990 c 247 § 3.]

226

80.36.540

TELECOMMUNICATIONS

80.36.530. Violation of consumer protection act-Damages
In addition to the penalties provided in this title,· a violation of
RCW 80.36.510, 80.36.520, or 80.36.524 constitutes an unfair or
deceptive act in trade or commerce in violation of chapter 19.86
RCW, the consumer protection act. Acts in violation of RCW
80.36.510, 80.36.520, or 80.36.524 are not reasonable in relation
to the development and preservation of business, and constitute
matters vitally affecting the public interest for the purpose of
applying the consumer protection act, chapter 19.86 RCW. It shall
be presumed that damages to the consumer are equal to the cost of
the service provided plus two hundred dollars. Additional damages
must be proved.
[1990 c 247 § 4; 1988 c 91 § 3.]
Library References
Consumer Protection e=:>6.
WESTLAW Topic No. 92H.

80.36.540. Telefacsimile

C.J.S. Trade to Marks. Trade to
Names. and Unfair Competition
§§ 237 to 238.

messages-Unsolicited transmission-Penalties
(1) As used in this section, "telefacsimile message" means the
transmittal of electronic signals· over telephone lines for conversion into written text.
. (2) No person, corporation, partnership, or association shall
initiate the unsolicited transmission of telefacsimile messages promoting goods or services for purchase by the recipient.
(3)(a) Except as provided in (b) of this subsection, this section
shall not apply to telefacsimile messages sent to a recipient with
whom the initiator has had a prior contractual or business rela.tionship.
<,
(b) A person shall not initiate an unsolicited telefacsimile message under the provisions of (a) of this subsection if the person
knew or reasonably should have known that the recipient is a
governmental entity.
(4) Notwithstanding subsection (3) of this section, it is unlawful
to initiate any telefacsimile message to a recipient who has previously sent a written or telefacsimile message to the initiator clearly
indicating that the recipient does not want to receive telefacsimile
messages from the initiator.
(5) The unsolicited transmission of telefacsimile messages promoting goods or services for purchase by the recipient is a matter
227

·;,1,
. &c,.