2. Background
Decision (D.) 04-09-062 fined Cingular Wireless (Cingular) $12.14 million for its unlawful early termination fee (ETF) policies and other corporate practices. The decision also ordered Cingular to pay reparations, later estimated to be valued at $18,467,220.38, to affected customers and declared that any unpaid reparations would escheat to the State of California General Fund.
Following continued litigation, including an application for rehearing at the Commission and appeal to the courts, Cingular now known as AT&T Mobility LLC (AT&T), the Utility Consumers' Action Network (UCAN), and the Commission's Consumer Protection and Safety Division (CPSD) entered into an all-party settlement. D.07-03-048 adopted this settlement, which resolved all litigation resulting from D.04-09-062 and required Cingular to pay the $12.14 million penalty previously assessed, as well as customer reparations. The settlement also established the details of the reparations plan, which was designed to provide restitution to two different customer groups. Group A customers consisted of the 115,623 customers (identified in the settlement as the "Actual Identified Claimants") who were known to have paid an ETF, a supplemental equipment charge, or both, to Cingular or an independent Cingular dealer or retailer. Group B consisted of another 91,722 customers (identified in the settlement as the "Potential Agent Claimants") who potentially had paid an ETF or a supplemental equipment charge to an independent Cingular dealer or retailer. Since Cingular did not have records to establish whether the Group B payments had been made and since many of the independent entities were no longer in business, Group B customers (unlike Group A customers) were required to submit a claim form once they had been located.
The all-party settlement provided for Rust Consulting, Inc. (Rust) to serve as the neutral claims administrator and also addressed, in a very general way, the distribution of any money remaining in the reparations accounts after all possible restitution had been made. The settlement required the parties to file a report showing "how much money in refund checks have been cashed, how much money remains outstanding in issued checks, and how much money remains in Reparations Funds A and/or B."1 Regarding any residual balance, the settlement stated:
If any funds remain in Reparations Funds A and/or B, the Commission shall subsequently determine in a separate decision how any remaining funds are to be distributed or otherwise utilized, but no funds remaining in Reparations Funds A and/or B shall be returned to Cingular. Consistent with prior Commission decisions, including TURN v Pacific Bell, 54 Cal. PUC 2d 122 (1994), In Re GTE California, 1998 Cal PUC LEXIS 910 (1998), and In Re CTS International, 2000 Cal. PUC LEXIS 202 (2000), where the Commission has ordered distribution for other equitable purposes in addition to escheatment pursuant to C.C.P. Section 1519.5, some or all of such amounts may be distributed to the Telecommunications Consumer Protection fund administered by the California Consumer Protection Foundation.2
Subsequently, D.07-09-015 granted UCAN a second intervenor compensation award in the amount of $171,996.30 for its substantial contribution to D.07-03-048. (Previously, the Commission awarded UCAN $367,401.25 for its substantial contribution to D.04-09-062.) In October 2007, AT&T filed a status report on the progress of the reparations process and thereafter D.08-02-015 authorized the use of a portion of the undistributed settlement monies remaining in the Group B reparations account to pay UCAN's second intervenor compensation award. D.08-02-015 also authorized the use of a portion of the interest earned on the principal in the Group A reparations account to reimburse the claims administrator for $61,783.09, the cost of providing live telephone support. This sum was in addition to the $600,000 that the all-party settlement required Cingular to deposit to cover the initial estimates for notice, administration, and monitoring costs associated with the reparations plan.
As the settlement states, the California Consumer Protection Foundation (Foundation) administers the Telecommunications Consumer Protection Fund (TCPF). The Foundation, established in 1991 following California v. Levis Strauss & Co. and incorporated under § 501(c)(4) of the Internal Revenue Code, administers numerous consumer trust funds and provides grants to eligible grantees pursuant to a rigorous application process.3 The Foundation currently administers consumer trust funds established and/or approved by agencies such as the Department of Consumer Affairs and the Attorney General's Office, as well as this Commission. Commission-established funds include the Community Collaborative Fund, the Electric Education Trust, and the TCPF. Grants from the TCPF are restricted to funding telecommunications consumer education and protection programs for limited English speaking consumers in California.
1 D.07-03-046, Appendix A (Settlement Agreement, Paragraph 6).
2 Id., emphasis added.
3 California v. Levis Strauss & Co. (1986) 41 Cal.3d 460 [equitable doctrine of cy pres, also called "fluid recovery," invoked to govern distribution of residual monies from class action settlement].
