4. Jurisdiction and Burden of Proof

4.1 Subject Matter Jurisdiction

D.02-10-061 rejects Cingular's arguments that the Commission lacks subject matter jurisdiction to undertake this investigation, concluding that (1) federal law does not preempt the field of wireless regulation, and (2) state law does not bar examination of the charges alleged in the ordering paragraphs.

4.1.1 Federal Preemption

We will not repeat here our federal preemption analysis. D.02-10-061 reviews the Omnibus Budget Reconciliation Act of 1993 (which amended § 332(c)(3)(A) of the Communications Act of 1934 to prohibit state regulation of terms of entry or rates charged by Commercial Mobile Service⁴) and the case law interpreting the sphere of regulation retained by the states. D.02-10-061 finds that "[t]he OII raises the kind of consumer protection matters that federal law permits the states to adjudicate and does not expressly or impliedly seek to regulate wireless rates or terms of entry." (OII, Finding of Fact 3; see also Conclusion of Law 4.) Though Ordering Paragraph 1(e) also alleges violation of Section 5 of the Federal Trade Commission Act (15 U.S.C. § 45(a)), no party pursued this theory at hearing and the briefs do not discuss it.

4.1.2 State Law Theories

The OII alleges violations of three Public Utilities Code statutes, §§ 451, 702 and 2896. It also alleges violations of D.95-04-028, in which the Commission removed a prohibition on the bundling of telephones and cellular service. These latter allegations include references to many consumer protection laws, including laws found in other California codes - the Song-Beverly Consumer Warranty Act and the Consumer Legal Remedies Act in the Civil Code, the Unfair Competition Law (UCL), which consists of the Unfair Business Practices Act (Bus. & Prof. Code § 17200 et seq.) and the False Advertising Act (Bus. & Prof. Code § 17500 et seq.) and Com. Code §§ 2314-2316.

D.02-10-061 rejects Cingular's contention that "the cited Public Utilities Code statutes are too vague to support an investigation into past utility behavior, on the one hand, or that they merely permit the Commission to fashion prospective relief, on the other." (Id. at p. 14.) In Section 6.1 of today's decision, we examine the parties' evidence in the context of established interpretations of these Public Utilities Code statutes. We also examine the allegations related to D.95-04-028.

Before leaving this subsection, however, we acknowledge the jurisdictional guidance provided by a recent decision of the California Court of Appeals, which specifically concerns the UCL. D.02-10-061 addresses, as follows, Cingular's claim that the Commission lacks subject matter jurisdiction over the UCL and other cited consumer protection statutes outside the Public Utilities Code:

We need not reach Cingular's arguments that we lack jurisdiction to enforce these statutes because, at a minimum, we may look to cases decided under them for guidance on the kinds of activities that have constituted consumer protection violations. Cingular provides no authority to the contrary. The parties' post-hearing briefs are the proper place to argue the correct use of these statutes in assessing evidence and fashioning appropriate relief, if any. (D.02-10-061, slip op. at p. 15.)

Greenlining Institute v PUC (103 Cal App 4^th 1324 (2002); 2002 Cal App LEXIS 5066), which issued in November 2002 (approximately one month after D.02-10-061), directly addresses the "purely legal question whether the PUC has jurisdiction over [UCL] claims" and holds that we do not since "it is clear that the Legislature envisioned enforcement of UCL claims solely in the courts." (Id. 2002 Cal App LEXIS at *6 and *744, respectively, emphasis added.) Nonetheless, citing a 1971 decision of the California Supreme Court, the appeals court reiterates that we may consider such claims without adjudicating them, if we do so in furtherance of our jurisdiction:

The PUC may, and indeed sometimes must, consider areas of law outside of its jurisdiction in fulfilling its duties. The NCPA court explained, "by considering antitrust issues, the Commission merely carries out its legislative mandate to determine whether the public convenience and necessity require a proposed development." (Id. at fn 10, citing Northern California Power Agency v PUC (NCPA) 5 Cal.3d 370, 378 (1971).)⁵

Thus, D.02-10-061 is not at odds with Greenlining Institute v PUC, since D.02-10-061 does not assert jurisdiction over UCL claims. However, in light of Greenlining Institute v PUC, we must reject recommendations by CPSD and UCAN that we order penalties that the UCL prescribes. If we lack jurisdiction to enforce the UCL, we cannot levy the penalties codified there. Our discussion of remedies, below, adheres to this jurisdictional limitation, which does not prevent the Commission from fashioning meaningful penalties under the Public Utilities Code where warranted.

We conclude that we are precluded from adjudicating the cited Civil Code provisions as well. Like the UCL, the Song-Beverly Consumer Warranty Act, which codifies an implied warranty of fitness by manufacturers, distributors and retailers of consumer goods sold at retail, requires the aggrieved consumer (or "retail seller" or "serviceman") to bring an "action" and describes what relief the "court" shall order if the consumer prevails. (See Civ. Code §§ 1794, 1794.2.) The Consumer Legal Remedies Act, which proscribes 17 different unfair acts and practices (the OII lists five of them) with respect to the sale or lease of consumer goods or services, likewise requires any "consumer" so damaged to bring an "action" for specified relief, including "any other relief that the court deems proper." (See Civ. Code §§ 1770, 1780.)

Jurisdiction under the Commercial Code is less clear. Sections 2314-2316 of the Commercial Code govern the warranty of merchantability implied in contracts for the sale of goods. Other provisions of the Commercial Code, which govern the remedies of buyers and sellers, are not so limiting as the language in the Civil Code. For example, Com. Code § 1106(2), a general provision, states merely: "Any right or obligation declared by this code is enforceable by action unless the provision declaring it specifies a different and limited effect." Com. Code § 1201(1) defines "action" more broadly than do the Civil Code statutes; it states: "'Action' in the sense of a judicial proceeding, includes recoupment, counterclaim, setoff, suit in equity, and any other proceedings in which rights are determined."

In our discussion of the evidence in Section 6.1 of today's decision, we examine whether full and fair resolution of this OII requires us to look beyond the Public Utilities Code to consider these other consumer protection statutes.

4.1.3 Agency

In its briefs, Cingular essentially concedes that the law of agency applies to its relationships with its sales agents and states that it has never sought to shield itself from liability based upon the actions of any of its agents. However, Cingular then argues that UCAN and CPSD have not established wrongdoing by Cingular's agents and, moreover, that the OII does not put agent relations at issue.

We need not address at any length the latter challenge. Ordering Paragraph 1 of the OII clearly asserts jurisdiction over all of Cingular's "operations," including Cingular's advertising, marketing and selling of wireless services. As a corporation, Cingular conducts its operations through officers and employees as well as agents, dealers, and so on. Neither expressly nor implicitly does the OII exclude from its scope Cingular's operations through agents.⁶ Moreover, the OII's textual discussion of site visits, and the Staff Report on which it relies, also describe customers' experiences with Cingular's "sales agents and dealers." (OII, slip op. at p. 8.) Under the law of agency if Cingular's agents violate other laws, Cingular generally is responsible. (See Witkin, Summary of California Law, 9^th Edition, Vol.2, §§ 41 et seq., §§ 75 et seq.)

4.2 Burden of Proof

All parties recognize that CPSD and UCAN have the burden to establish by a preponderance of the evidence that Cingular has committed the alleged violations. This is the usual standard in Commission adjudicatory proceedings such as this investigation.⁷