IV. Motion to Withdraw Complaint
On August 12, 2002, CISPA and Pacific/ASI (collectively the "Settling Parties") jointly filed a motion to withdraw this complaint and dismiss the proceeding with prejudice. The Settling Parties state they have reached a Settlement Agreement that is more advantageous than proceeding with litigation because it resolves their dispute and serves the interest of ISPs and Californians who want to use DSL service in areas served by ASI. The Settlement Agreement, attached to the motion to withdraw, contains provisions addressing system architecture, customer migration intervals, provisioning of DSL transport service, access to competitive information, sales practices of ASI and Pacific personnel, creation of an ombudsperson to resolve sale practice disputes between ISPs and Pacific/ASI, and creation of a marketing fund to promote ASI's DSL services through non-affiliated ISPs. The Agreement also addresses payment of attorneys' fees to CISPA and a provision prohibiting CISPA's involvement in any state or federal proceedings under Section 271 of the Telecommunications Act of 1996, or state proceedings under Pub. Util. Code § 851 regarding claims based on the facts alleged in the complaint.
According to the Settling Parties, the Settlement resolves their dispute, solidifies various remedies regarding DSL service to ISPs that Pacific/ASI have already implemented during the course of this litigation, commits Pacific/ASI to continued improvement, provides resources to CISPA members who sell ASI's DSL service, and ensures CISPA does not suffer a hardship based on the attorneys' fees it incurred in the course of this litigation. They contend the Settlement is in the public interest because it will ultimately benefit California consumers who have or seek DSL Internet service. Specifically, they contend the Settlement benefits consumers by minimizing the time involved in changing from one ISP to another, which will allow consumers to exercise choice in ISP providers without significant downtime. In addition, they assert the Settlement assists independent ISPs in marketing DSL, which should give consumers a wider variety of ISPs to choose from for their broadband services. The Settling Parties believe that the provision limiting CISPA's future involvement in other Commission proceedings regarding the facts alleged in this complaint is a fair trade for other provisions of the Settlement.
Brand X, TURN/UCAN, and Morgen Van Buren filed comments opposing the Settling Parties motion to withdraw the complaint. Brand X contends the settlement is not consistent with Rule 51.1(a) of the Commission's Rules of Practice and Procedure because it limits CISPA's involvement in other Commission proceedings. Brand X also asserts that the Settlement is not in the public interest because it does not meaningfully resolve the issues presented in the complaint. According to Brand X, the Settlement does not give ISPs any enforceable rights to counter the alleged improper actions of Pacific/ASI. Therefore, Brand X maintains that the Commission cannot approve the Settlement because it is not in the public interest and it should be rejected or modified to conform to Rule 51.1(a).
TURN/UCAN contend that withdrawal of the complaint is contrary to the public interest because it prevents the Commission from hearing complaints by ISPs and customers and severely limits the Commission's ability to investigate the allegations contained in the complaint. They contend the Settlement contains no enforceable language to prevent ASI from duplicating the kinds of abuses alleged by CISPA in its complaint. Further, TURN/UCAN maintain the motion to withdraw the complaint violates the Commission's rules regarding settlements (Rule 51 et seq.) because the Settlement attempts to silence CISPA on matters that are not limited to this proceeding, and the Commission has already rejected a similar attempt to limit a party's participation in a regulatory proceeding.3 TURN maintains that although the Settlement limits participation in other proceedings "based in whole or in part on any of the facts alleged in the Complaint," this restriction is meaningless because the allegations in the complaint were broad and comprehensive and covered numerous operations and marketing practices of Pacific/ASI. They suggest that the Commission should allow CISPA to withdraw from the case but invite ISPs or their customers to continue to present testimony in this docket, while at the same time moving the testimony already filed by CISPA into the evidentiary record of the case.
Morgen Van Buren responds that the Settlement Agreement was executed in violation of Rule 51.1(b) because it was signed without first holding a settlement conference with notice to all other parties. Van Buren maintains that Rule 51.1 applies to all settlements in all proceedings, and requires a settlement conference with notice and opportunity to participate to all parties. Van Buren explains that he had asked for notice of a settlement conference and never received one from attorneys of CISPA or Pacific/ASI. He asks that the Commission require CISPA and Pacific/ASI to reopen settlement negotiations in the presence of a Commission-appointed ALJ mediator, so that Van Buren and other parties can present their views on the issues in this case in a confidential meeting. Van Buren also contends that the Settlement violates Rule 51.1(a) because it affects CISPA's participation in other Commission and FCC proceedings.
The Settling Parties reply that the Settlement Agreement and corresponding withdrawal of the complaint are in the public interest because the Settlement will change the way ASI provides DSL transport. They contend the Settlement contains specific commitments to ISPs which are enforceable through breach of contract litigation. Further, they reply that the Settlement does not violate the Commission's rules because the parties are not requesting Commission approval of the settlement under Rule 51.1. Rather, they merely seek leave to withdraw the complaint and terminate the proceeding. Pacific/ASI contends the Rule 51 procedure is voluntary in that parties "may settle on a mutually acceptable outcome" and "may by written motion propose settlements for adoption by the Commission" but they are not required to obtain Commission approval of settlements. Therefore, the Commission does not need to determine whether the settlement is in the public interest, as required by Rule 51.1(e).
The Settling Parties respond to comments that the Settlement limits participation in various Commission proceedings by claiming that the Settlement merely prohibits CISPA from raising the very same issues and the very same factual situations that have been settled here. They contend that Pacific/ASI would not have provided compensation or otherwise made concessions through the Settlement without assurance that the same facts and issues would not be raised elsewhere. CISPA and its members are free to participate in other Commission proceedings to raise other issues or assert claims based on new or different facts. Finally, they claim that any unease with Section 271 proceeding limitations are moot given the Commission's recent Section 271 order (D.02-09-050, September 19, 2002).
The Settling Parties respond to Van Buren's claim that he was not notified of any settlement conferences, as required by Rule 51.1(b), by stating that all of the parties in the proceeding had notice of settlement discussions based on discussions at the August 2001 prehearing conference and based on e-mails in May 2002. They claim that Rule 51.1(b) does not require an additional notice of a settlement conference on the eve of execution of a settlement.
Pacific/ASI object to TURN/UCAN's proposal to allow CISPA to withdraw and leave the case open because they compare this to leaving the defendants in the public stockade without a complainant. Further, they note that if this proposal were adopted, the terms of the Settlement would not become effective and CISPA would forfeit the benefits contained in the Settlement. The Settling Parties also oppose TURN/UCAN's suggestion to have CISPA file its testimony for the record in this proceeding. They see no need for the testimony to be incorporated into the record, particularly when it is only the testimony of one side to the complaint. Rather, the Commission can review the Settlement itself to determine whether to allow withdrawal of the complaint.
CISPA responds to concerns that the Settlement binds other parties in other Commission proceedings by stating that the Settlement is not binding on individual ISPs, end user customers, or consumer groups and their ability to raise their own complaints against Pacific or ASI. Further, the Settlement does not waive the rights of CISPA concerning matters outside the scope of the complaint.
Discussion
The issue before us is whether we should allow the Settling Parties to withdraw the complaint and thereby dismiss it with prejudice. In granting this request, the Commission would essentially waive scrutiny of the underlying settlement Agreement under the standard set forth in Rule 51.1(e). Brand X and TURN/UCAN allege that the underlying settlement is not in the public interest and that Commission rules regarding settlements were violated. The Settling Parties contend that the Commission does not need to determine whether the settlement is in the public interest, the settlement rules do not apply because they are not invoked here, and even if they did apply, there were no violations.
We agree with Van Buren's assessment that the Commission's rules defining settlements, setting procedures for their proposal, and setting a standard for review apply to all settlements in Commission proceedings. Under those definitions, this is a contested settlement because Van Buren does not support its adoption. We also find D.01-02-017 to provide useful guidance on the issue of whether to grant a request to dismiss a complaint. As stated therein:
Resolution of a request for dismissal of a complaint requires a balancing of litigant's discretion to control interaction with governmental bodies against the Commission's need to advance the public business. (Application of Southern California Gas Co., 43 CPUC 2d 639, (D.92-04-027), (1992).) The Commission should deny requests for dismissal when a case involves the orderly development of the law or issues of substantial public interest or importance. (D.01-02-017, 2001 Cal. PUC LEXIS 72, *1.)
We find that the Commission should deny the motion to withdraw the complaint and should instead review the Settlement Agreement under Rule 51.1 to determine whether it is reasonable in light of the whole record, consistent with law, and in the public interest. Commenters raise several issues relating to the public interest that the Commission should consider such as whether the Settlement violates the Rule 51.1(a) limitation on matters outside the scope of the settled case and whether the settlement contains enforceable provisions that adequately resolve the service quality and anti-competitive concerns raised in the initial complaint. TURN/UCAN point out that the language in paragraph 9 of the settlement appears to limit CISPA's involvement in the Section 271 case, Section 851 proceedings regarding DSL service, and other cases such as the NRF audit. TURN/UCAN also charge that the language in paragraph 9 is so broad that it might deprive ISPs and their customers from being heard, or restrict the Commission's ability to pursue allegations on its own. The Settling Parties contend that the language in paragraph 9 is integral to the settlement and that Pacific/ASI would never have made the concessions in the settlement without agreement that future claims arising from these same issues would be prevented. The service quality and anti-competitive allegations that are at the heart of this complaint are matters of substantial public interest. Therefore, the Commission should judge whether the public interest is served by the terms of the settlement and the restrictions contained therein on the ability of CISPA, its individual members, or any other parties, to raise these same facts in other Commission and federal proceedings.
We appreciate that the parties have attempted to resolve a business dispute without further litigation that is a drain on the resources of all involved. Nevertheless, we find that the seriousness of the allegations raised in this complaint require us to consider the issues raised by commenters regarding this settlement. The balancing described in D.01-02-017 requires the Commission to place consideration of the public interest over the business interests of CISPA, Pacific, and ASI in desiring to withdraw the complaint.
For the guidance of the parties as they consider whether to revise the Settlement or to join the proposed Settlement, we note some preliminary issues we have identified as we have reviewed the Settlements and parties' comments on it.
We are concerned that the language of paragraph 9 of the settlement, "Settlement Agreement; Release of Claims," is unclear and perhaps too broad in its limitations on the ability of other parties to pursue future claims against Pacific or ASI. The statement in paragraph (a) that "The parties reserve their rights as to the legal effect of this Settlement Agreement upon the claims of individual members of CISPA in other proceedings," is vague and ambiguous because it could be interpreted to allow Pacific or ASI to counter future claims as violations of the Settlement. The provision limiting CISPA from proactively participating further in any Section 271 proceeding appears to go beyond a limit on involvement related to the facts underlying this complaint. The provision requiring CISPA to withdraw its comments in the Commission's Section 271 proceeding is problematic to the extent those comments covered topics other than those underlying this complaint.
Finally, the third paragraph of section 9(a) contains language restricting CISPA and Defendants from any involvement in a future claim, lawsuit, complaint or administrative proceeding against the other "arising out of or based upon, any and all facts which are the basis of the Complaint or claims asserted in this litigation...." We note that the record of this proceeding never advanced beyond the broad allegations in the complaint, given that testimony was only served, but never accepted into the record. It is unclear how such a broad restriction as contained in paragraph 9(a) will be practically enforced. The settlement refers to the "facts" underlying the complaint, but we are unsure what this refers to since the record for the case was not developed. We are concerned this language might unreasonably exclude any future claims of misconduct against Pacific or ASI unless the facts, time periods, and claims referred to are specified. We invite parties to address these concerns either in a revised agreement or in further comments after the required settlement conference described below.
We are also concerned with the situation described by Mr. Van Buren. His opposition is based on what he views as a violation of the notice requirements of Rule 51.1(b). He claims he requested notice of any settlement conference and did not receive it. Settling Parties contend that no additional notice was required beyond the initial notice at a PHC in August 2001 that settlement discussions were under way and e-mails between CISPA and Pacific/ASI in May 2002. Van Buren appears to not have received adequate notice of settlement. The e-mails that CISPA/ASI attach to their September 25, 2002 reply comments as proof that parties were apprised of settlement negotiations are all dated prior to the May 10, 2002 ruling granting Van Buren's intervention request. Given that settlement discussions between the CISPA and Pacific/ASI broke off in late 2001 and did not resume until May 2002, around the time Van Buren was granted leave to intervene, it is reasonable in this case to find that CISPA and Pacific/ASI should have notified Van Buren that settlement discussions were resuming. Van Buren had not been granted party status when the discussions began, and since they resumed after a long hiatus and after Van Buren was granted intervention, a new notice of a settlement conference should have been issued.
We find that it would be unreasonable to waive review under Rule 51.1 and allow withdrawal of the complaint when there is a question raised by one party as to whether the settlement was entered into properly under Commission rules. Therefore, we will require the Settling Parties to convene a settlement conference for all parties to this proceeding to determine if the settlement will be modified. Following the settlement conference, the Settling Parties should file a report within 14 days after the settlement conference on whether the settlement will be modified. Other parties may comment on this report within ten days of its filing. Van Buren's request for mandatory mediation is denied because we do not consider it appropriate to require parties to submit to mediation in this case.
TURN/UCAN's request that the Commission allow CISPA to withdraw and require filing of the testimony is denied. It is unclear from TURN/UCAN's pleading whether any ISPs or end-users actually want to pursue the issues in the initial complaint. At this point, we prefer to review the Settlement to see whether it is reasonable and meets the public interest. We can do this based on the comments that have been filed thus far, and based on any further comments we receive after a settlement conference is held. At that point, the Commission can consider whether the Settlement is reasonable and in the public interest, or whether certain terms within the Settlement should be modified before it can be approved.
In summary, the motion to withdraw the complaint and dismiss it without prejudice is denied. The Commission will review the Settlement Agreement under Rule 51.1(e), based on the comments filed thus far by the parties and any additional comments that are filed after a settlement conference is noticed and held.
IT IS RULED that:
1. The motions to intervene of Brand X Internet LLC, The Utility Reform Network (TURN) and the Utility Consumer Action Network (UCAN) are granted for the limited purpose of commenting on the motion to withdraw the complaint and the accompanying Settlement Agreement filed by California Internet Service Provider Association (CISPA), Pacific Bell Telephone Company (Pacific), and SBC Advanced Solutions Inc. (ASI).
2. The Process Office and the parties are directed to add the following names to the service list for this proceeding:
1. Jim Pickrell
Brand X Internet LLC
927 6th Street
Santa Monica, CA 90403
(310) 393-8467
2. Christine Mailloux
The Utility Reform Network
711 Van Ness Avenue, Suite 350
San Francisco, CA 94102
(415) 929-8876
3. Michael Shames
UCAN
3100 5th Avenue, Suite B
San Diego, CA 92101
(619) 696-6966
3. The August 12, 2002 motion filed by CISPA, Pacific and ASI to withdraw the complaint and dismiss the proceeding is denied.
4. The August 12, 2002 motion by CISPA, Pacific, and ASI to file confidential information under seal is denied as moot given the August 29, 2002 request by these same parties to withdraw the motion for confidential treatment.
5. CISPA, Pacific and ASI shall convene a settlement conference within 21 days of this ruling.
6. Within 14 days of the settlement conference, CISPA, Pacific, and ASI shall file and serve a report on whether their Settlement Agreement will be modified. Other parties may comment on this report within 10 days of its filing.
7. The Settlement Agreement attached to the CISPA, Pacific, and ASI motion to withdraw the complaint, or any modifications of it, shall be reviewed under Rule 51.1, based on comments filed thus far and any additional comments received following the settlement conference.
Dated December 17, 2002, at San Francisco, California.
/s/ LORETTA LYNCH
Loretta Lynch
Assigned Commissioner
/s/ DOROTHY J. DUDA
Dorothy J. Duda
Administrative Law Judge
CERTIFICATE OF SERVICE
I certify that I have by mail this day served a true copy of the original attached Asssigned Commissioner's and Administrative Law Judge's Ruling Granting Intervention Requests and Denying Motion to Withdraw Complaint on all parties of record in this proceeding or their attorneys of record.
Dated December 17, 2002, at San Francisco, California.
/s/ FANNIE SID
Fannie Sid
NOTICE
Parties should notify the Process Office, Public Utilities Commission, 505 Van Ness Avenue, Room 2000, San Francisco, CA 94102, of any change of address to insure that they continue to receive documents. You must indicate the proceeding number on the service list on which your name appears.
3 See Resolution T-16522, dated Nov. 29, 2001 rejecting a provision in an interconnection agreement between Pacific and Covad Communications that attempted to limit Covad's participation in the Commission's Section 271 Proceeding (R.93-04-003/I.93-04-002/R.95-040943/I.95-04-044.)
