2. Procedural History

This proceeding consolidates complaints against Pacific Bell by the Utility Consumers' Action Network (UCAN), the Greenlining Institute and the Latino Issues Forum (Greenlining), and the Telecommunications Union, California Local 103, International Federation of Professional and Technical Engineers, AFL-CIO (TIU). The Office of Ratepayer Advocates (ORA) intervened in the consolidated proceeding and presented its own evidence on a number of key issues. The complaints allege that Pacific Bell was:

· persuading customers to switch from complete Caller ID blocking to selective blocking by providing incomplete and misleading information about the service and the level of privacy protection it provided;

· marketing packages of services under the name "The Basics" and the "Basics Plus" which suggest that the services are basic telephone service rather than a package of optional features;

· offering the most expensive inside wire repair service first and only telling customers of a lower-priced option if they reject the first;

· unlawfully using and disclosing Customer Proprietary Network Information; and

· employing sales programs and practices which operated to the detriment of customer service and quality customer information.¹

On July 7, 1998, the Assigned Commissioner and Administrative Law Judge (ALJ) issued a ruling determining the scope of the proceeding and designating the ALJ as the presiding officer.

To address complainants' allegations in an efficient manner, the Assigned Commissioner and ALJ directed the parties to participate in a collaborative process to discover and potentially agree upon the basic facts that underlie these complaints. To facilitate this effort, Pacific Bell agreed to produce testimony and produce witnesses for deposition on a list of subjects identified by complainants, rather than the usual course of complainants producing the first round of testimony. On August 21, 1998, Pacific Bell produced testimony of four witnesses. The parties continued discovery and negotiations regarding a potential factual stipulation, and on October 30, 1998, the parties filed a statement of undisputed facts.

ORA filed its statement of disputed facts, the declaration of its witness, Kelly Boyd, and its report on Pacific Bell's marketing practices. On November 23, 1998, Greenlining and UCAN submitted their direct testimony. Pacific Bell submitted rebuttal testimony on December 15, 1998, with surrebuttal testimony following on December 23, 1998. Cross-examination of witnesses occurred on January 21 through 27, 1999. Late-filed exhibits 90-102 were added to the evidentiary record by ALJ ruling on March 11, 1999. The statutory deadline to conclude the proceeding was extended by Decision (D.) 99-04-005. The proceeding was submitted with the filing of briefs on March 26, 1999.

The Presiding Officer mailed her Presiding Officer's Decision (POD) on December 22, 1999. Pacific Bell, Greenlining, and TIU submitted timely appeals of the POD. On January 21, 2000, The Utility Reform Network (TURN) and the Communications Workers of America filed motions to intervene and appeals of the POD. The Presiding Officer granted both motions by ruling on February 1, 2000.

On February 7, 2000, ORA submitted a request for official notice of the Veto Message of Governor Pete Wilson to Assembly Bill (AB) 1161. ORA's request is granted.

The Commission, en banc, held oral argument on February 23, 2000. The Presiding Officer issued a Modified POD on July 13, 2000. The Modified POD reflected only minor clarifications to the POD.

On October 25, 2000, Commissioner Neeper mailed his own proposed Modified Decision on Appeal, and on November 12, 2000, Commissioner Bilas mailed proposed alternate pages to Commissioner Neeper's Decision. On December 11, 2000, Commissioner Wood mailed his own proposed Modified Decision on Appeal. On July 9, 2001, Commissioner Brown mailed his own proposed Modified Decision on Appeal.

2.1. Requests To Reopen the Record

2.1.1. Wallace Roberts

On July 22, 1999, Intervenor Wallace Roberts submitted a letter, copied to all parties, in which he alleged that Pacific Bell had transferred his local service from another provider back to Pacific Bell without his authorization. He submitted another letter on July 24, 1999, where he suggested that the unauthorized transfer was in retribution for his request that Pacific Bell not contact him about switching back. Roberts requested that his allegations be investigated as part of this case.

On July 30, 1999, Pacific Bell provided a letter in which it explained that Roberts' unauthorized transfer had been caused by clerical error and that steps had been taken to ensure that no further such errors occur. Pacific Bell opposed reopening the record.

2.1.2. TIU

On September 9, 1999, TIU filed its Petition to Set Aside Submission and Reopen the Proceeding for the Taking of Additional Evidence. TIU stated that Pacific Bell had unilaterally canceled agreements with TIU that eliminated the requirement to offer certain services on every call and to limit supervisory monitoring. The agreements are included in the evidentiary record as Exhibits 44 and 45.

On October 1, 1999, Pacific Bell filed its response in which it stated that the petition lacked merit because the record shows that the agreement could be canceled at any time, and any questions regarding the legality of the cancellation would be better addressed in the collective bargaining process

demonstrating a change in law or fact since submission which would justify re-opening the record. Here, Roberts alleges that Pacific Bell has violated the anti-slamming statute, § 2889.5.² This issue is unrelated to the facts and law currently at issue in this proceeding. Should Roberts wish to pursue this issue, he may do so through the Commission's complaint process.

TIU claims that Pacific Bell's cancellation of a particular agreement with TIU affects the facts in this case. Subsequent cancellation does not affect the fact that the agreements were in place during a portion of the time relevant to this proceeding. Should TIU wish to challenge Pacific Bell's right to cancel the agreements, TIU may do so through the collective bargaining process or other appropriate means.

For the reasons stated above, the Roberts request and TIU's petition are denied.

2.2. Changes from the Presiding Officer's Modified Decision

This Decision differs from the Revised Presiding Officer's Decision (mailed November 11, 2000) in the following ways:

· Like the POD, this Decision declines to adjudicate claims that Pacific Bell violated the California Unfair Competition Law (Business and Professions Code §17200 et seq. and § 17500 et seq.), and notes that remedies available under that law are cumulative and in addition to remedies that may be imposed under other laws.

· The amount of the fine is changed to $25.55 million, with the Decision explaining how the fine was calculated and what criteria were considered (See section 9.4.)

· Contrary to the Revised POD, we do not order refunds for those customers who were sold services for "The Basics" and "The Works" through sequential offering techniques ("offer high, watch them buy, offer low, nowhere to go"). Rather we order notifications by Pacific Bell of those customers of their service options, and provide for them an opportunity to cancel unwanted services.

· Contrary to the Revised POD, we find fault with Pacific Bell's lack of disclosure to tenants that it is the landlord's responsibility to maintain inside wire.

· With the respect to the claim that Pacific Bell improperly released confidential subscriber information without subscribers' consent, in violation of §2891, this Decision clarifies that we do not reach the issue whether, as Pacific Bell contends, there is an implied exception to §2891 based on agency law principles.

The Findings of Fact, Conclusions of Law and Ordering Paragraphs have been revised consistent with these substantive changes.

2.2.1. Business and Professions Code

On appeal of the POD, Greenlining contends that the decision should contain findings that Pacific Bell has violated Business and Professions Code §§ 17200 and 17500.

The California Unfair Competition Law, Business and Professions Code § 17200 et seq. and § 17500 et seq. (UCL) prohibits "any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." (Business and Professions Code § 17200.) The UCL "borrows" violations of other laws and treats them as unlawful business acts independently actionable under the UCL. Cel-Tech Communications v. LA Cellular (1999) 20 Cal.4^th 163, 180; Quelimane Co., Inc. v. Stewart Title Guar. Co. (1998) 19 Cal. 4^th

26. Practices may be "unfair" even if not proscribed by some other law. Cel-Tech, 20 Cal.4^th at 180.

Courts may enjoin unfair or unlawful business practices and grant other relief "as may be necessary to restore to any person . . . any money or property . . . which may have been acquired by means of such unfair competition." (Business and Professions Code § 17203; see also § 17535.) A violation of the advertising provisions of the UCL (Business and Professions Code § 17500, which prohibits "deceptive, false, and misleading" advertising) constitutes a misdemeanor punishable by a civil penalty of up to $2,500 per violation and six months in jail. (Business and Professions Code §§ 17500, 17534, 17536.)

All of the remedies for violations of the UCL are "cumulative to each other and to the remedies or penalties available under all other laws of this state." (§§ 17205, 17534.5.) Thus, in a UCL action, a court may order remedies in addition to sanctions that have been or may be imposed under other laws and/or by other courts or agencies, based on the same conduct. (People v. Damon (1996) 51 Cal.App.4th 958, 969.)

While this proceeding was pending at the Commission, the District Attorneys for Alameda, Monterey, and San Mateo Counties filed a complaint on behalf of the People of the State of California against Pacific Bell and its corporate affiliates based on factual allegations essentially identical to those at alleged in this proceeding. The DAs alleged that Pacific Bell's marketing practices were misleading, in violation of §§ 17200 and 17500 of the Business and Professions Code. On December 6, 1999, the Superior Court of Alameda County sustained Pacific Bell's demurrer to the complaint on the grounds that the CPUC has exclusive jurisdiction over the subject matter of the complaint. People v. Pacific Bell, et al, No.816635-9, (Dec. 6, 1999); aff'd, 89 Cal. App. 4^th 844 (Cal.App. 1^st Dist., as modified on denial of rehearing, July 5, 2001); petition for review filed July 17, 2001.

The Commission's regulatory authority stems from the California Constitution and the Public Utilities Code, and gives this Commission broad regulatory power over Pacific Bell. The Commission's remedial powers are extensive. (See San Diego Gas & Elec. Co. v. Superior Court (Covalt) (1996) 13 Cal. 4^th 893, 914-915; Wise v. PG&E (1999) 77 Cal.App.4^th 287, 299; Public Utilities Code § 701.) Our disposition of the instant complaint rests on Public Utility Code issues, and we do not adjudicate the Unfair Competition Law claims. (See Business and Profession Code §17204.)

2.2.2. Customer Complaints

Complainants' allegations are based, in large part, on Pacific Bell failing to inform customers of less-expensive or different options. Customers who later became aware of these options could reasonably be expected to contact Pacific Bell seeking an option about which they were not informed. The record reveals that Pacific Bell's usual response was to transfer the customer to the other service option, and refund any disputed amount. Pacific Bell, however, did not track these service changes. In this way, Greenlining, TURN, and ORA allege that Pacific Bell can successfully evade a comprehensive understanding by the Commission of the effect on customers of Pacific Bell's marketing abuses.

Because Pacific Bell did not keep records of actual customer complaints, ³ there is no way of knowing exactly how many customers have been affected by the marketing abuses found in today's decision. Sufficient evidence of such abuse is present in the record, however, in the form of customer and service representative testimony, ORA's monitoring of actual service representatives, and Pacific Bell's admissions regarding its policies and procedures. (See Turn v. Pacific Bell, 49 CPUC 2d 299, 305 (D.93-05-062) (1993).)