Prison Phone Justice

NO. 73966-8

IN THE SUPREME COURT OF THE
STATE OF WASHINGTON

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.

SUPPLEMENTAL BRIEF OF PETITIONERS SANDY JUDD,
TARA HERIVEL AND ZURAYA WRIGHT
Chris R. Youtz, WSBA #7786
Jonathan P. Meier, WSBA #19991
Sirianni Youtz Meier & Spoonemore
719 Second Avenue, Suite 1100
Seattle, WA 98104
Telephone: (206) 223-0303
Facsimile: (206) 223-0246
Attorneys for Petitioners

TABLE OF CONTENTS
I.

NATURE OF THE CASE .................................................................. 1

II.

THE PRISON TELEPHONE SYSTEM AND THE
PHONE COMPANIES' FAILURE TO DISCLOSE ......................... 1

III.

FOCUS OF SUPPLEMENT BRIEF ................................................. .2

IV.

ISSUE ................................................................................................. 3

V.

ARGUMENT ...................................................................................... 3
A.

The statute provides a direct CPA cause of action
for failure to disclose ................................................................. 3

B.

RCW 80.36.510 is not a mere policy statement-it
identifies a statutorily-enforceable, substantive
standard of conduct. ................................................................... 5

C.

D.

VI.

1.

The Court of Appeals ignores the first rule
of statutory interpretation................................................. 6

2.

RCW 80.36.510 describes a standard of
conduct and states that violation of the
standard is an unfair trade practice ................................... 7

3.

Section .520 is not rendered meaningless ......................... 8

4.

If the Court affirms the decision of the
Court of Appeals, it will create a glaring
inconsistency in the law .................................................. 10

Disclosure by tariff is no disclosure at all ................................ 11
1.

The "legal fiction" of disclosure by tariff
clashes with legislative intent. ........................................ 11

2.

The phone companies misread the statute ..................... .13

3.

The filed rate doctrine does not apply ............................ 16

The phone companies may not avoid damages by
purporting to rely on WUTC regulations ................................. 18

CONCLUSION ................................................................................. 19

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TABLE OF AUTHORITIES
CASES

Adamson v. Worldcom Communications, Inc.
78 P.3d 577 (Or. App. 2003) ............................................................... 16
American Tel. & Tel. Co. v. Central Office Tel., Inc.
524 U.S. 214 (1998) ............................................................................ 16
Anderson v. Valley Quality Homes, Inc.
84 Wn. App. 511, 928 P.2d 1143 (1997) .............................................. 6
Hangman Ridge Training Stables, Inc. v. Sa/eco Title
Ins. Co.
105 Wn.2d 778, 719 P.2d 531 (1986) ............................................... 4,5
Hardy v. Claircom Communications Group, Inc.
86 Wn. App. 488, 937 P.2d 1128 (1997) ............................................ 16
Henery v. Robinson
67 Wn. App. 277, 834 P.2d 1091 (1992) .............................................. 7
Hill v. MCI Worldcom Communications, Inc.
141 F. Supp. 2d 1205 (S.D. Iowa 2001) ............................................ 16
Industriallndem. Co. v. Kallevig
114 Wn.2d 907, 792 P.2d 520 (1990) ................................................. 11
Judd v. American Tel. & Tel. Co.
116 Wn. App. 761, 66 P.3d 1102 (2003) ..................................... passim
Lovejoy v. AT&T Corp.
111 Cal. Rptr.2d 711 (Cal. App. 2001) ............................................... 16
McConnell v. Federal Election Comm 'n
124 S. Ct. 619 (2003) .......................................................................... 19
Parents Involved in Community Schools v. Seattle
School Dist. No. 1
149 Wn.2d 660, 72 P.3d 151 (2003) ..................................................... 8
Pink Dot, Inc. v. Teleport Communications Group
107 Cal. Rptr.2d 392 (Cal. App. 2001) ............................................... 16

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Qwest Corp. v. Kelly
59 P.3d 789 (Ariz. App. 2002) ............................................................ 16
Rettkowski v. Department ofEcology
122 Wn.2d 219,858 P.2d 232 (1993) ................................................. 18
Tenore v. AT & T Wireless Servo
136 Wn.2d 322,962 P.2d 104 (1998) ................................................. 16
Western Telepage, Inc. V. City of Tacoma
140 Wn.2d 599, 998 P.2d 884 (2000) ................................................... 6

STATUTES
RCW 18.16.250 ........................................................................................ 10
RCW 19.116.010 ...................................................................................... 10
RCW 48.01.030 ........................................................................................ 10
RCW 60.04.035 ........................................................................................ 10
RCW 61.34.040 ........................................................................................ 10
RCW 70.127.216 ...................................................................................... 10
RCW 70.128.058 ...................................................................................... 10
RCW 80.01.040 (1987) ............................................................................. 14
RCW 80.04.010 (1987) ............................................................................. 14
RCW 80.36.100 (1987) ............................................................................. 14
RCW 80.36.350 (1987) ............................................................................. 15
RCW 80.36.510 ................................................................................. passim
RCW 80.36.520 .......................................................................... 8, 9, 13, 18
RCW 80.36.522 ........................................................................................ 15
RCW 80.36.530 ................................................................................. passim

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LEGISLATIVE HISTORY

Final Bill Report, SB 6745 ....................................................................... 12
House Bill Report, SB 6745 ................................................................. 3, 12
AGENCY ORDERS

In re International Pacific, Inc.

WUTCNo. UT-920546, 1993 WL500046 ........................................ 15
WUTC v. Fone America, Inc.

WUTC No. UT-911483, 1995 WL 125465 (1995) ............................ 14
WUTC v. Payline Sys., Inc.

WUTC No. UT -911250, 1992 WL 230496 ........................................ 15
COURT RULES

CR 12(b)(6) ................................................................................................. 2
TREATISES

WPI 320.00, Introductory Note
6A WASHINGTON PRACTICE: WASHINGTON
PATTERN JURY INSTRUCTIONS, p. 282 (4 th ed.
2002) ................................................................................................... 11

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I.

NATURE OF THE CASE

In 1988, the state Legislature declared that a telephone company's
failure to identify "the services provided or the rate, charge or fee" for a
long distance, collect telephone call "is" an unfair trade practice and a per

se violation of the Consumer Protection Act.
For over ten years, the respondents in this case-Verizon, Qwest,
and CenturyTel-failed to disclose this information to friends and families
of Washington state inmates. Plaintiffs are the spouses or relatives of
three current or former inmates who received and paid for collect, long
distance calls without receiving the required disclosure.
The question on appeal is whether the phone companies' failure to
disclose gives rise to a claim under the Consumer Protection Act-a
question that the Legislature has already answered in the affirmative.

II.

THE PRISON TELEPHONE SYSTEM AND THE
PHONE COMPANIES' FAILURE TO
DISCLOSE

Between 1988 and 2000, a Washington state inmate who wanted to
talk to a family member, friend, or attorney outside of prison had a single
option: place a collect call at a prison pay phone. CP 2, 4-5. Under a
1992 contract with the Washington Department of Corrections, each
respondent provided operator pay phone services to specified prisons. Id.
The contract grants each company what amounts to a monopoly on long
distance service from the prisons. CP 220-22.
During the time period covered by this lawsuit (1996 to 2000),
operators employed by the phone companies failed to disclose the charge

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for inmate calls, failed to provide any information on how to obtain the
applicable rate, and failed to identify the company that was providing the
service. CP 5. The recipient of an inmate call was given two choices: (1)
accept the call without any disclosure of rate or service information; or (2)
hang up. Id.

III. FOCUS OF SUPPLEMENT BRIEF
Although there are four distinct issues on appeal, see Petition for
Review at 1, this brief focuses on a single issue: whether the Disclosure
Statutes, RCW 80.36.510 and .530, provide a direct cause of action under
the Consumer Protection Act (CPA). This is a pure issue of statutory
construction.
If the Court concludes that the Legislature created a direct CPA
cause of action for violation of RCW 80.36.510, then questions about the
validity of regulations promulgated by the Washington Utilities &
Transportation Commission (WUTC), or whether this lawsuit is the
appropriate vehicle for challenging those regulations, are moot. This case
can, and should, be resolved by deciding this threshold issue. l

lOne additional issue requires discussion. The trial court dismissed respondent
CenturyTel on an alternative ground, ruling that CenturyTe1 never provided long distance
service and therefore is not subject to the Disclosure Statutes. This Court should reject
that factual conclusion for two reasons. First, the trial court erred by deciding factual
issues on a CR l2(b)(6) motion to dismiss. Second, even if the trial court properly
decided a question of fact, the facts are hotly disputed. A complete discussion of the
issue is presented in Plaintiffs' Opening Brief at pp. 40-41; Reply Brief at pp. 32-35; and
Petition for Review at pp. 19-20.

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IV. ISSUE

RCW 80.36.530 provides that "a violation of RCW 80.36.510 ...
constitutes an unfair or deceptive act in trade or commerce in violation of
chapter 19.86 RCW, the consumer protection act."

RCW 80.36.510

provides that a failure to disclose "the services provided or the rate, charge
or fee" for a collect, long distance telephone call "is a deceptive trade
practice." Have plaintiffs stated a claim for violation of the CPA by
alleging that the phone companies failed to disclose "the services provided
or the rate, charge or fee" to plaintiffs when they received long distance
collect telephone calls from Washington state inmates?
V.
A.

ARGUMENT

The statute provides a direct CPA cause of action for
failure to disclose.

In 1988, the Legislature enacted three statutes that require
companies providing long distance operator services at public telephones
to disclose certain information to consumers. RCW 80.36.510 pinpoints
the problem:

long distance phone companies were not disclosing the

"services provided or the rate, charge, or fee" for the call.

As the

legislative history makes clear, pay phone charges were often "very
expensive compared to routine long distance calling of the same distance
and duration." House Bill Report, SB 6745 (CP 126).
The statute flatly states that a failure to disclose rate information
"is a deceptive trade practice":
The legislature finds that a growing number of
companies provide, in a nonresidential setting,
telecommunications services necessary to long distance

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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 80.36.51 0 (emphasis added).
RCW 80.36.530 gives teeth to this pronouncement. It defines the
relationship between section .510 and the CPA, making a violation of the
former a per se violation of the latter:
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. 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.
RCW 80.36.530.
One way that the Legislature may create a CPA cause of action is
to declare that the violation of a particular statute is an unfair trade
practice. In Hangman Ridge Training Stables, Inc. v. Safeco Title Ins.
Co., 105 Wn.2d 778, 786, 719 P.2d 531 (1986), this Court declared: "A

per se unfair trade practice exists when a statute which has been declared
by the Legislature to constitute an unfair or deceptive act in trade or
commerce has been violated." All that is required is the Legislature's
explicit reference to the CPA. "Where the Legislature specifically defines

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the exact relationship between a statute and the CPA, this court will
acknowledge that relationship." ld. at 787.
That is exactly what the Legislature has done here. In clear and
unmistakable terms, the Legislature identified an unfair trade practice in
section .510. Failure to disclose the "services provided or the rate, charge
or fee" for a long distance call from a public telephone is an unfair trade
practice.

In equally clear and unmistakable terms, the Legislature

provided the trigger for a CPA cause of action in section .530.

A

"violation" of section .510-failure to disclose-is an unfair trade practice
"in violation of ... the consumer protection act." Read together, section
.530 provides the trigger and the requisite reference to the CPA; section
.510 provides the substantive rule that may be violated.
There is nothing ambiguous about this language. Total failure to
disclose-as alleged in our complaint-violates section .510, which in
tum gives rise to a CPA cause of action under section .530. Hangman
Ridge requires recognition of the Legislature's clear cut declaration that a

violation of section .510 is also a violation of the CPA.
B.

RCW 80.36.510 is not a mere policy statement-it
identifies a statutorily-enforceable, substantive standard

of conduct.
The parties diverge on a threshold issue of statutory interpretation.
The phone companies (and the majority opinion of the Court of Appeals)
treat section .510 as a statement of legislative policy, devoid of any
substance or effect.

Plaintiffs, and the dissenting opinion of Judge

Appelwick (who served in the Legislature when the law was enacted), see

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it differently: when the Legislature said that a failure to disclose "is a
deceptive trade practice," and then said that a "violation" of section .510
was a per se violation of the CPA, it meant what it said.
1.

The Court of Appeals ignores the first rule of
statutory interpretation.

The "first rule" of statutory interpretation is that the court should
assume that the Legislature means exactly what it says.

Western

Telepage, Inc. v. City of Tacoma, 140 Wn.2d 599, 609, 998 P.2d 884

(2000). The Court of Appeals ignored this rule when it held that RCW
80.36.510 was a statutory policy statement that could not give rise to
enforceable rights. See Judd v. American Tel. & Tel. Co., 116 Wn. App.
761, 770, 66 P.3d 1102 (2003). More specifically, the Court of Appeals
ignored the Legislature's express statement, in RCW 80.36.530, that a
"violation" of section .510 gives rise to a CPA cause of action. In fact,
RCW 80.36.530 refers to a "violation" of section .510 twice: first in
stating that a violation of section .510 constitutes a violation of the CPA,
and second in stating that a violation of section .510 is a matter "vitally
affecting the public interest," thus satisfying the public interest element of
the CPA.
When the Legislature defines the relationship between statutes as
clearly as it has here, there is no room for second-guessing or
interpretation. See Anderson v. Valley Quality Homes, Inc., 84 Wn. App.
511,517-20,928 P.2d 1143 (1997) (where statute declares violation of
another statute or regulations to be violation of CPA, court must recognize
that relationship); Henery v. Robinson, 67 Wn. App. 277, 289, 834 P.2d

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1091 (1992) ("A defendant commits a per se unfair trade practice when
his actions violate a statute describing an unfair or deceptive act in trade
or business.").
The Court of Appeals ignored another cardinal rule of statutory
interpretation: all of the words in a statute must be given effect so that no
portion is rendered meaningless or superfluous. See Judd, 116 Wn. App.
at 775 (Appelwick, J., dissenting). The two references to a "violation" of
section .510 are not a mistake.

The second sentence of section .510

contains a blunt statement of law: failure to disclose the services provided
or rate, charge or fee "is" an unfair trade practice. By failing to give effect
to the Legislature's cross-reference to section .510, the Court of Appeals
rewrote the statutes and nullified legislative intent.

2.

RCW 80.36.510 describes a standard of conduct
and states that violation of the standard is an
unfair trade practice.

The majority opinion of the Court of Appeals characterizes section
.510 as an "introduction to legislative policy" that does "not give rise to
enforceable rights." Judd, 116 Wn. App. at 770. That section, however,
focuses on specific behavior by specific actors and declares that a lack of
disclosure by those actors is a deceptive trade practice.

Section .510

articulates a substantive standard of conduct. None of the cases cited by
the phone companies or the Court of Appeals involves a statute that
contains such a point-blank statement.
The fact that the code reviser labeled section .510 a "Legislative
Finding" is of no consequence. Headings inserted by the code reviser

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after a law has been enacted are not reliable indicators of legislative intent.
See Parents Involved in Community Schools v. Seattle School Dist. No.1,

149 Wn.2d 660,684 n.lO, 72 P.3d 151 (2003).
There is, moreover, no need for an agency to create additional
disclosure requirements in order to enforce this standard or determine
whether it has been violated. If a phone company fails to disclose service
or rate information, it has committed an unfair trade practice. That is what
Judd alleged.

3.

Section .520 is not rendered meaningless.

The phone companies contend that plaintiffs' reading of the law
renders RCW 80.36.520 "meaningless."
Review at 8.

Joint Answer to Petition for

A plain reading of section .530, however, compels the

conclusion that section .520 serves an important and independent role in
the Legislature's enforcement scheme.
The statute is worded in the disjunctive:

"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."

RCW 80.36.530.

If there is a

complete failure to disclose, the substantive provision of section .510 is
violated.

See Judd, 116 Wn. App. at 777 (Appelwick, J., dissenting)

("The result is that RCW 80.36.510 may be violated independent ofRCW
80.36.520.").
But the Legislature also left room for regulations that set the bar
higher.

By directing the WUTC to issue regulations that "assure

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appropriate disclosure," the Legislature gave the agency the flexibility to
require additional, specific types of disclosure. Those requirements may
themselves be violated. If, as alleged in this case, a company fails to make
any disclosure, then .510 is violated. Alternatively, if a company makes a
disclosure, but that disclosure fails to meet standards established by the
WUTC, then .520 is violated. The Legislature determined that either
violation may be enforced under the CPA. RCW 80.36.530.
From a policy perspective, it makes sense to provide a separate
cause of action for utter lack of disclosure, while still permitting an
agency to develop disclosure requirements that may be fine-tuned
depending on changes in technology and commerce. This reading fulfills
the remedial purpose of the law. What is beyond dispute, however, is that
the plain text of the statute provides a CPA cause of action for distinct
violations of either section .510 or section .520; those remedies coexist.
In short, the Court of Appeals' conclusion that the Legislature
"preempted any direct action against the phone companies" and provided
a cause of action "only for violations of the regulations," Judd, 116 Wn.
App. at 762, runs afoul of a straightforward reading of the statute. The
Legislature's express creation of alternative remedies for violations of
either RCW 80.36.510 or 80.36.520 accomplishes the legislative purpose

of requiring disclosure.

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4.

If the Court affirms the decision of the Court of
Appeals, it will create a glaring inconsistency in

the law.
By dismissing RCW 80.36.510 as a mere policy statement, the
Court of Appeals has engendered uncertainty in Washington's consumer
protection laws.

In particular, the majority's reasoning guts other

consumer statutes that prohibit deceptive conduct, but do so in terms of
broad policy statements. A number of these statutes, all of which contain
legislative

findings

and policy

statements,

serve

as

traditional

springboards for CPA actions despite language that is much less specific
than the statement in RCW 80.36.510. See, e.g., RCW 19.116.010 (public
interest finding concerning vehicle subleasing); RCW

18.16.250

(cosmetologists); RCW 61.34.040 (equity skimming); RCW 60.04.035
(acts of coercion by contractor); RCW 70.128.058 (operation of adult
family home without license); RCW 70.127.216 (operation of in-home
services agency without license). As these statutes underscore, legislative
findings linked to the CPA are not toothless statements to be ignoredthey are the very mechanism the Legislature has chosen to define
deceptive conduct and tie that conduct to a cause of action under the CPA.
Another example is RCW 48.01.030, the legislative cornerstone of
insurance bad faith actions in Washington. It provides:
The business of insurance is one affected by the
public interest, requiring that all persons be actuated by
good faith, abstain from deception, and practice honesty
and equity in all insurance matters. Upon the insurer, the
insured, their providers, and their representatives rests the
duty of preserving inviolate the integrity of insurance.

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Using phrases like "actuated by good faith" and "practice honesty and
equity in all insurance matters," this statute is the very essence of a broad
policy statement. That has not stopped the courts from holding that it may
serve as the basis for a CPA claim. See Industrial Indem. Co. v. Kallevig,
114 Wn.2d 907, 916-17, 792 P.2d 520 (1990) (affirming jury verdict
under CPA for insurance bad faith); WPI 320.00, Introductory Note, 6A
WASHINGTON PRACTICE: WASHINGTON PATTERN JURY INSTRUCTIONS,

p. 282 (4 th ed. 2002).
If statutory language this broad can give rise to a CPA claim, the
Court of Appeals surely erred when it relegated the Legislature's
unambiguous statement that nondisclosure is an unfair trade practice to the
judicial dust bin.
c.

Disclosure by tariff is no disclosure at all.

The phone companies do not dispute that they failed to disclose
rates to plaintiffs. They argue, however, that they satisfied the statutory
mandate by filing tariffs that contained rate information. This argument
should be rejected for three reasons.

1.

The "legal fiction" of disclosure by tariff clashes
with legislative intent.

The Legislature was not engaging in an academic exercise when it
required rate disclosure.

Any layperson who has tried to decipher a

telecommunications tariff knows that disclosure-by-tariff is illusory. The
Court of Appeals acknowledged as much by describing such disclosure as
a "legal fiction." Judd v. American Tel. & Tel. Co., 116 Wn. App. 761,

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771 n.11, 66 P.3d 1102 (2003).

The notion of disclosure-by-tariff

eviscerates the legislative goal of ensuring practical and timely disclosure.
To be meaningful, rate information must be conveyed before the
consumer accepts a collect call, when the consumer has the ability to
either refuse the call or limit its length. "Although some companies may
charge several dollars to connect a caller to long distance from these
phones, the customer is often unaware of the charge until it appears on the
monthly bill from a local phone company." Final Bill Report, SB 6745
(CP 123). The House Bill Report described testimony in favor of the bill
as follows:
Some arrangements and charges were very expensive
compared to routine long distance calling of the same
distance and duration and the expense was not evident in
any way to the caller beforehand.
House Bill Report, SB 6745 (CP 126). The only realistic way to ensure
that consumers are made aware of the expense "beforehand" is to tell them
what the charge is before a collect call is accepted. Disclosure must occur
in "real time." The importance of disclosure is heightened where, as here,
the phone companies are monopoly providers.
The Disclosure Statutes were intended to address a real problem by
requiring real disclosure-not by letting phone companies hide behind a
legal fiction.
Tariffs cannot accomplish the statutory mandate for another
reason:

the phone companies connecting the calls did not identify

themselves. For example, when plaintiff Sandy Judd received a collect
call from her inmate spouse, the operator failed to identify the company

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providing the service. Thus, even if Ms. Judd had scrutinized phone
company tariffs before she picked up the phone, she would have been
unable to determine the cost ofthe call because she would not know which
company's tariff to examine.

2.

The phone companies misread the statute.

The phone companies postulate that the Disclosure Statutes were
never really aimed at them. The Court of Appeals was persuaded by this
argument, concluding that the Legislature directed its law at "new"
telephone companies that were "popping up" and charging exorbitant
rates. Judd, 116 Wn. App. at 767-68. The Court distinguished these
"new" companies from the respondent phone companies, which are known
as "local exchange companies," or LECs. [d. at 772 ("it was the non-local
exchange companies that the Legislature pointed to as the problem
companies charging higher rates"). The Court concluded that disclosure
by tariff was consistent with the Legislature's intent to require real
disclosure only from the non-LECs. [d.; see id. at 771 n. 11.
The problem with this reasoning is that there is not a shred of
support for it in the statute. The Legislature never "pointed to" non-LECs
as the source of the problem. Section .510 simply refers to "companies"
that "provide, in a nonresidential setting, telecommunications services
necessary to long distance service."

Respondents fit that description.

Section .520, which directs the WUTC to issue regulations, covers
"alternate operator services companies" (AOS companies). Section .520
expressly defines this term to include any company "providing a

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connection to intrastate or interstate long distance services from places
including, but not limited to, hotels, motels, hospitals, and customerowned pay telephones." Again, each respondent fits squarely within the
statutory definition.
Although the Disclosure Statutes do not distinguish between LECs
(respondents) and other providers of alternate operator services, the phone
companies seek to manufacture a distinction by arguing that non-LECs
were not required to file tariffs when the Disclosure Statutes were enacted
in 1988. See Joint Answer to Petition for Review at 11. They do so in
order to counter plaintiffs' argument that the Legislature was fully aware
that all AOS companies-including the "new" non-LEC companies
singled out by the Court of Appeals-were required to file tariffs. If all
companies were required to file tariffs when the Disclosure Statutes were
enacted, the Legislature must have required something more than
disclosure by tariff.
In fact, Washington law required all providers of alternate operator
services to file tariffs before 1988.

See RCW 80.36.100 (1987) (all

"telecommunications companies" required to file tariffs).

Every AOS

company was a telecommunications company regulated by the WUTC.
See RCW 80.04.010 (1987); RCW 80.01.040 (1987). The WUTC has

consistently

described

non-LEC

AOS

companies

as

statutory

"telecommunications companies" falling within its regulatory jurisdiction.
r

See, e.g., WUTC v. Fane America, Inc., WUTC No. UT-911483, 1995 WL

125465, *1 & n.2 (1995).

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To support their argument, the phone companies erroneously assert
that non-LEC providers of alternate operator services were unregulated
until 1990, when the Legislature passed RCW 80.36.522 and required
them to register with the WUTC. Joint Answer at 11. In fact, AOS
companies were required to register with the WUTC before the Disclosure
Statutes were enacted in 1988.

See RCW 80.36.350 (1987); In re

International Pacific, Inc., WUTC No. UT-920546, 1993 WL 500046, *1
(noting that AOS company had registered as telecommunications
company under RCW 80.36.350 and had filed tariffs).

Additional

authority indicating that all telecommunications companies were required
to file tariffs prior to 1988 is found in Appellants' Reply Brief at pp. 3-7;

see also WUTC v. Payline Sys., Inc., WUTC No. UT-911250, 1992 WL
230496, *2 (non-LEC provider of alternate operator services filed tariffs
that predated WUTC's ability to subject tariffs to substantive review under
1990 law, RCW 80.36.522).
The upshot is this: when the Legislature identified the problem as
the failure of companies to disclose their rates, it had already concluded
that disclosure by tariff was insufficient. The disclosure referred to in
section .510 must mean something more than fictional disclosure by tariff.
If it did not, the Legislature was wasting its time in requiring disclosure
that was already mandated by law. By creating a statutory loophole for
the LEC phone companies where none exists, the Court of Appeals
effectively arrogated the legislative role. That is reason enough to reverse.

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3.

The filed rate doctrine does not apply.

The phone companies argue that the filed rate doctrine compels the
Court to recognize the legal fiction of disc1osure-by-tariff.

More

specifically, they rely on the strand of the doctrine that presumes that
utility customers have constructive knowledge of tariffs. See Judd, 116
Wn. App. at 771 n.ll (citing Hardy v. Claircom Communications Group,
Inc., 86 Wn. App. 488, 492, 937 P.2d 1128 (1997)).
The filed rate doctrine is a judge-made rule that serves two
purposes:

(1) preserving a regulating agency's authority to determine

whether rates are reasonable; and (2) ensuring that regulated entities
charge only those rates that are approved by law. See Tenore v. AT & T
Wireless Serv., 136 Wn.2d 322, 331-32, 962 P.2d 104 (1998).
The filed rate doctrine does not apply here. It is limited to "suits
that seek to alter the terms and conditions" of a tariff. American Tel. &
Tel. Co. v. Central Office Tel., Inc., 524 U.S. 214, 229 (1998) (Rehnquist,
J., concurring).

Tariffs, however, do not govern the entirety of the

relationship between a phone company and its customer. Id. at 230. State
law may impose duties that lie outside the tariff; lawsuits based on such
duties are not barred. 2 Id. at 230-31.
Plaintiffs do not challenge the rates in the phone companies' tariffs
or allege that these rates were improper in light of the services provided.

2 See, e.g., Hill v. MCI Worldcom Communications, Inc., 141 F. Supp. 2d 1205,
1213-15 (S.D. Iowa 2001); Adamson v. Worldcom Communications, Inc., 78 P.3d 577,
582 (Or. App. 2003); Qwest Corp. v. Kelly, 59 P.3d 789, 800-02 (Ariz. App. 2002);
Lovejoy v. AT&T Corp., 111 Cal. Rptr.2d 711,721-24 (Cal. App. 2001); Pink Dot, Inc. v.
Teleport Communications Group, 107 Cal. Rptr.2d 392, 398 (Cal. App. 2001).

- 16-

Nor do they ask the court to fashion a damages remedy that puts the court
in the role of judicial rate-maker.

Rather, plaintiffs are pursuing a

statutory cause of action and a legislatively-imposed liquidated damages
remedy. This remedy will not result in a retroactive change in tariffed
rates, or require a court to second-guess or undercut an agency's authority
to regulate rates. Instead, it will enforce a legislative mandate to impose
damages for conduct that lies outside the scope of any tariff.
The reasonableness of the phone companies' rates is not the issue.
What matters is whether information was properly disclosed to the paying
consumer in a timely and practical manner. Because this case does not
challenge the reasonableness of any provision in respondents' tariffs or
undermine a government agency's authority to regulate rates, the filed rate
doctrine does not preempt plaintiffs' statutory cause of action.
An additional reason supports this conclusion.

The Court of

Appeals concluded that tariffs filed with the WUTC barred plaintiffs' nondisclosure claim.

See Judd, 116 Wn. App. at 771 n.ll.

The phone

companies likewise pointed to the existence of tariffs required by
Washington law. See, e.g., CP 139, 142-45. It is therefore clear that the
filed rate doctrine at issue here derives from state law. By asking this
I

Court to invoke a judge-made, state law doctrine to bar a cause of action
expressly sanctioned by the Legislature, the phone companies request a
judicial veto of a statutory cause of action. That is improper.

- 17 -

D.

The phone companies may not avoid damages by
purporting to rely on WUTC regulations.

The Court of Appeals concluded that the phone companies could
"likely" avoid damages because of their "good faith reliance" on WUTC
regulations exempting local exchange companies from disclosure rules.
Judd, 116 Wn. App. at 774 & n.20. The Court's reasoning erroneously
assumes that plaintiffs must demonstrate that the regulations issued under
section .520 are invalid.

See id.

If, however, a CPA claim may be

brought for violation of either section .510 or .520, reliance on agency
regulations is no defense to a CPA action for violation of section .510.
To the extent that the phone companies argue that the WUTC's
exemption of local exchange companies from the statutory definition of
"alternate operator service company" forecloses a cause of action under
section .510, their argument conflicts with basic principles of statutory
construction. "An agency cannot modify or amend a statute through its
own regulation." Rettkowski v. Department of Ecology, 122 Wn.2d 219,
227, 858 P.2d 232 (1993).
The WUTC exceeded its authority when it exempted LECs from a
statutorily-defined term that plainly includes LECs.

See Plaintiff's

Opening Brief at 27-32; Reply Brief at 7-24; Petition for Review at 14-18.
This constitutes an independent basis for reversal and renders
unreasonable the phone companies' "good faith reliance." See Plaintiffs'
Reply Brief at 28-30.

Justice Kennedy's observation regarding the

relationship between a statute and an implementing regulation fits this
case well:

- 18 -

Adoption of a regulation that does not implement the
statute to its full extent does not erase the statutory
requirement. This is not a case in which a statute is
ambiguous and the agency interpretation can be relied upon
to avoid a statutory obligation that is uncertain or arguable.

McConnell v. Federal Election Comm 'n, 124 S. Ct. 619, 762 (2003)
(Kennedy, J., concurring in part and dissenting in part).
This Court, however, need not rule on the validity of the WUTC
regulations, the WUTC's authority to grant waivers from its regulations,
or any "good faith" defense, if it concludes that plaintiffs have stated a
direct claim under the Disclosure Statutes for violation of the CPA. The
case boils down to two basic principles: an unambiguous statute grants a
CPA cause of action for failure to disclose, and a regulatory agency cannot
extinguish a statutory cause of action.
VI.

CONCLUSION

Plaintiffs Sandy Judd, Tara Herivel, and Zuraya Wright ask this
Court to reverse the judgment and remand for additional proceedings.
Respectfully submitted: January 22,2004.
SIRIANNI YOUTZ
MEIER & SPOONEMORE

~----

R. Youtz, WSBA #7786
than P. Meier, WSBA #19991
omeys for Petitioners
Judd, Herivel, and Wright

- 19 -

Certificate of Service

I certify, under penalty of perjury pursuant to the laws of the State
of Washington, that on January 22, 2004, a true copy of the within
SUPPLEMENTAL BRIEF OF PETITIONERS SANDY JUDD, TARA HERIVEL AND
ZURAY A WRIGHT was served upon counsel of record as indicated below:
Timothy J. O'Connell

[x]

STOEL RIVES LLP

[ ]

600 University Street, Suite 3600
Seattle, WA 98101
Attorneys for Respondent
Verizon Northwest Inc. (GTE Northwest, Inc.)

[ ]
[ ]

Robert B. Mitchell
Carol S. Arnold
Athan E. Tramountanas
PRESTON GATES & ELLIS LLP
925 Fourth Avenue, Suite 2900
Seattle, WA 98104-1158
Attorneys for Respondents
CenturyTel Telephone Utilities, Inc. and
Northwest Telecommunications, Inc.,
d/b/a PTI Communications, Inc.

[x]
[ ]
[ ]

Julia Parsons Clarke
Kathleen M. O'Sullivan

[x]
[ ]

PERKINS COlE LLP

[ ]

[ ]

1201 Third Avenue, Suite 4800
[ ]
Seattle, WA 98101-3099
Attorneys for Respondent
Qwest Corp. (U.S. WEST Communications, Inc.)
Kelly Twiss Noonan

[x]

STOKES LAWRENCE, P.S.

[ ]

800 Fifth Ave., Suite 4000
Seattle, WA 98104-3179
Attorneys for
American Telephone and Telegraph Company

[ ]
[ ]

Donald H. Mullins
Diana P. Danzberger

[x]
[ ]

BADGLEY MULLINS LAW GROUP

[ ]

1201 Third Ave., Suite 5100
Seattle, W A 98101
Attorneys for T-Netix, Inc.

[ ]

DATED: January 22,2004, at Sea

- 20-

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