4. Violation of § 2896(a)

Under § 2896(a) telephone corporations must provide customers with customer service that includes "[s]ufficient information upon which to make informed choices among telecommunications services and providers. This includes ... information regarding the provider's ... service options, pricing, and terms and conditions of service. A provider need only provide information to its customers on the services it offers."

We have already addressed Greenlining's argument that the tariffs are deficient. We turn now to Greenlining's two additional claims under § 2896(a). Have defendants, knowingly or otherwise, used direct mail marketing materials which failed to accurately state the cost of voicemail? And have defendants' sales representatives failed to inform customers about the call forwarding costs and message retrieval costs associated with using business voicemail?

4.1. PBIS' Print Advertising

Greenlining points to print advertising, in English, Spanish, and several Asian languages, which PBIS used to market voicemail between 1995 and 1998. (Ex. 9.) The record does not identify clearly which documents represent direct mailings and which represent advertisements distributed in other ways, but defendants' witnesses Lowry and Topol both testified that most of PBIS' voicemail advertising was direct mail (though only a small portion of voicemail sales can be attributed to direct mail advertising, according to defendants).

In any event, the text of the various pieces of print advertising is relatively consistent. Letters signed "Robert Lowry, Business Development Manager" and addressed "Dear Business Customer" or "Dear Business Manager" predominate. These offer "Pacific Bell Voice Mail" for "just $19.95 a month" (Series 50 and Series 100) and for "only $21.95 per box per month-just 73¢ a day" (Series 50 Plus and Series 100 Plus). Some of the letters explain the $21.95 includes a $2.00 per month charge for Call Forwarding and disclose an additional installation fee, which some of the promotions waive. Certain other letters advertise an earlier Series 50 promotion priced at "only $10.95 a month-only 37 cents a day."

While some of the earlier advertising pieces (from as early as 1995) state "additional fees may apply", defendants admit that, prior to the fall of 1998, they did not routinely include more specific disclosures that usage charges apply for call forwarding or for message retrieval from a business line.⁵ These disclosures, subsequently added as standard footnotes to the other text, appear in two main forms:

Call Forwarding is an additional monthly fee. All Call Forwarding features are not available in some areas. Additional usage fees may apply. (Ex. 9.)

or:

Current business line usage charges will apply to calls forwarded to Pacific Bell Voice Mail or when accessing the mailbox from your business. (Ibid.)

According to Lowry, PBIS' print advertising is not deceptive because, literally, PBIS' voicemail (i.e., the voice mailbox which PBIS sells) has no usage fees and is not usage sensitive. The usage charges associated with call forwarding (and likewise with message retrieval from a business line) are "business network access charges" which Pacific, or another local service provider, assesses. This contention - that the statements are technically and therefore factually accurate - is central to defendants' case. Defendants also argue that disclosures by sales representatives at the time of sale, followed by written post-sale materials, cure any notice defect.

Defendants claim that they were always concerned that associated business line usage fees be disclosed. Defendants' witness Camp, president of Pacific's ISG when voicemail was first offered in 1988, and until recently president of PBIS, testified that among the options defendants considered early on was having customers sign a written disclosure. The record does not reveal why this option was discarded or whether other options, besides those implemented, were considered. Camp stated he knew that customer service representatives were instructed to make the disclosure to customers and that a second disclosure was provided after the sale.

As discussed above, PBIS added routine disclosures to pre-sale print advertising in 1998. Greenlining disputes defendants' motives in choosing how and when to disclose the call forwarding and message retrieval charges, arguing in essence that any disclosure not made in print advertising is worthless. Greenlining points to the "The Value Study" commissioned by Camp in 1995 which concluded that "Sales of PBIS Voice Mail products result in significant incremental revenue and margin to the regulated side of Pacific Bell." ⁶ (Ex. C20.) While the study clearly shows voicemail is lucrative for Pacific, and arguably suggests a motive to defer full disclosure of business line usage charges, the study does not demonstrate defendants launched a deceptive print advertising campaign. To the contrary, the record includes a 1995 direct mail example which contains a general disclosure that "additional fees may apply."

Greenlining also points to the "PBIS Market Research Memorandum" from December 1996, which reports on consumer reactions to five enhanced voicemail features: Direct Messaging, Pager Notification, Extension Mailbox, Message-Alert, and Audio Call Screening. The study found consumers valued core voicemail over these "add on" features. With respect to pricing, the study concluded:

Although a particular feature may be considered valuable (i.e. Audio Call Screening), it is important to recognize that this value does not necessarily translate into a willingness to pay incremental fees. Instead, it appears that consumers expect these features to be included as a part of the core voice mail offering. (Ex. C56.)

The study goes on to examine each of the five features and what additional, flat, monthly fee that feature might bear. Greenlining relies on the study as proof that defendants' knowingly undertook to market voicemail to business customers in a deceptive fashion. In fact, the study was commissioned a number of years after "core" voicemail was in the market and it does not address marketing or pricing strategies for core voicemail. Thus, the study has no relevance to the issues in this proceeding.

Greenlining conducted a survey of customer understanding by showing the Series 50 "$10.95 a month" promotion (which does not include a disclosure) to 52 individuals at a reception of the Asian Business Association in San Francisco in 1999. Greenlining reports that 44 individuals (85%) understood the total cost of voicemail and any usage to be $10.95. We need not review at length the conflicting testimony of parties' experts on correct sampling methodology and the weight to be accorded this survey. We conclude the survey is of limited value as proof. We question the effort to impose a subjective test upon what ultimately must be an objective assessment. And we question the survey's usefulness as a subjective measure of the target audience. Not only were the respondents not qualified in any way (we do not even know if they actually purchase business telecommunication services, for example) but they were only asked to review material which contains no disclosures and there was none of the follow-up which we discuss below.

4.2. Sales Disclosure

According to defendants, customers cannot order PBIS' voicemail over the internet or by returning the tear-off portion of any direct mail advertisement, for example, but only by talking with a Pacific or PBIS customer service representative. (Pacific calls its employees "Service Representatives"; PBIS uses the term "Customer Care Advisors.") Defendants put forward credible evidence that it is their standard business practice to train all customer service representatives to disclose the usage charges associated with call forwarding or with voicemail message retrieval. Defendants produced various witnesses (for Pacific, witnesses Coleman and Dickey; for PBIS, witnesses Dwinell, Evans, Hawkins, and Martinez) to explain the training customer service representatives receive about business services and enhanced service offerings, the specific training techniques and materials used, how these have been revised within the timeframe at issue, and the job performance monitoring employed after training. We conclude this is competent evidence of defendants' customary business practice. (See Evid. Code § 1105, Baron v Sanger Motor Sales (1967) 249 Cal App 2^nd 846, 855.)

We are not persuaded by Greenlining's arguments that the training materials devote too few pages to usage disclosures or that the pressure to make sales discourages employees from making the disclosures. The primary support for the latter contention is testimony of Greenlining's witness Gamboa regarding his residential sales experience as a Pacific employee more than 20 years ago. Defendants' evidence on their current practices for business sales is more relevant and adequately refutes Greenlining's suggestion that a strong incentive exists for customer service representatives to ignore their training.

Defendants argue that after a voicemail sale is made any residual customer confusion is further mitigated because defendants provide "sales collateral" in the form of a confirmation letter, a "Welcome Letter" (which includes business disclosures among the general terms and conditions), and a User Guide. Though defendants admit the User Guide has not always included business line usage disclosures, they state the Welcome Letter has. The disclosure terminology in the record actually appears in an attachment to the Welcome Letter entitled "General Terms and Conditions." (Ex. 9, 68, C518.) This attachment, which resembles somewhat the kind sent to a new credit card subscriber, includes a disclosure under the subtitle "Other Charges." The disclosure is the same one used in some of the print advertising: "Current business line rate usage rates will apply to calls forwarded to Pacific Bell Voice Mail and when accessing the voice mailbox from your business."

4.3. Customers' Testimony

Though defendants made an extensive showing that it was their standard business practice to disclose business line usage charges orally at the time of sale and in written material provided afterwards, five business voicemail customers testified they were unaware of the usage charges. None of these customers testified he or she had received PBIS' direct mail solicitations or subscribed to voicemail on the basis of those advertisements, however.

The most emphatic statement, in the prepared testimony of Greenlining's witness De Vries, includes the following:

Q. Do you remember being told by Pacific Bell, at the time you became a Voice Mail customer, that you would incur extra charges for each message forwarded to your Voice Mail box?

A. No, I am absolutely certain that I was not told that. I do not remember being told anything related to usage or per-call charges. (Ex. 212, emphasis added.)

De Vries, a lawyer and self-described "sophisticated telecommunications consumer" who subscribed to voicemail in 1998, could not recall receiving any written disclosures, either. As for message retrieval costs, he stated he was "not sure" whether business line usage costs were assessed, but implicitly recognized they might be, since:

I knew I was dialing a seven-digit number. On the other hand, I knew that calls to Pacific Bell telephone numbers - like the Pacific Bell business office - have always been without charge (first as seven-digit numbers, now as 800 numbers). Further, calls to Pacific Bell's repair service (611) are also still free.⁷ (Ibid.)

Greenlining's witness Rodriguez, the former director of Latino Issues Forum, testified he ordered voicemail in 1994 for both that organization and Greenlining (PBIS records indicate 1996), but could recall neither oral nor written disclosures of associated business line usage charges. Rodriguez explained he had numerous conversations with Pacific Bell sales representatives as well as with an account executive working with him, because he was comparing "multiple vendors" and "multiple options" and needed to understand what the total cost would be.

The testimony of three other customers (Greenlining's witnesses Redburn, Cañas, and Mitchell) is somewhat less compelling. Redburn, who has been a business voicemail subscriber since 1995, simply testified he did not recall receiving any disclosures, oral or written. He produced a brochure entitled "Know How Now, Easy To Use Instructions for Pacific Bell Voice Mail," which contains no disclosures but is not part of the post-sales collateral, according to defendants. (Ex. 211.) Though Cañas testified she did not remember any disclosures when she arranged for voicemail service for Latino Issues Forum in Los Angeles in 1999, she was not a new customer but had prior experience with the use and operation of the product at the organization's San Francisco main offices. Her bill for the Los Angeles service identifies the San Francisco office as the mailing address. Mitchell also could not recall any disclosures but testified she engaged in management oversight and did not have direct responsibility for purchasing telecommunications services for her company, including the voicemail added in 1996.

4.4. Defendants' Adjustment Policy

Defendants' witness Dickey described the adjustment policy defendants follow when a customer contacts them complaining that he or she did not order a service after receipt of the sales collateral: "If the customer does not want the service, the Representatives are trained to remove the service from the customer's account and adjust all monthly recurring and non-recurring charges from the customer's account." (Ex. C511.) Other evidence, introduced by Greenlining, includes utility records of two such complaints by voicemail customers who alleged usage charges had not been disclosed to them. (Ex. C26.) The records reflect that the usage charges were credited from one customer's account; the redress sought by the other customer is unclear from the records, as is the actual resolution.

4.5. Conclusion

On balance, we determine the evidence does not establish that defendants have violated § 2896(a). We conclude that defendants' evidence on training and monitoring of its customer service representatives establishes a business practice which the Evidence Code permits us to infer is followed routinely, barring proof to the contrary. Such proof is absent here. Accordingly, because defendants' print advertisements are technically accurate and because defendants' business practices require additional disclosures, we conclude defendants have minimally complied with the statutory requirements.

Nonetheless, we are troubled by the specter of opportunistic marketing suggested by the lack of business line usage disclosures in some pre-1998 print advertising even though it was defendants' practice to make disclosures both at the time of sale and post-sale. It is undisputed that business voicemail provides significant financial benefit to Pacific, as well as PBIS, and whether or not Pacific authorized the direct mail campaign discussed above, Pacific stood to benefit from increased sales of its affiliate's product. We caution defendants to ensure up-front disclosure of all call forwarding and business line usage charges is made in all further voicemail promotions - written or otherwise - as well as in all sales contacts with customers.

We are also troubled that five customers testified that they could not remember hearing oral disclosures or receiving written disclosures and we think defendants should be also. Though such testimony does not prove defendants failed to make the disclosures, we conclude that each of those customers testified truthfully. Other evidence suggests that several customers may not have been in the position to receive one or both disclosures, however, and we also recognize that post-sale collateral may have been misplaced or discarded unread, and that memories may fade with time. Nonetheless, the possibility remains that defendants did not make the disclosures. The evidence merely indicates that it is more likely than not that defendants followed their customary business practice.

In their briefs, defendants emphasize that their disclosure practices are at issue in this proceeding, not what customers understand about voicemail. With respect to the causes of action at issue, that is correct. The fact remains that five business customers testified credibly they did not know that business line usage charges are incurred for voicemail-associated call forwarding or for message retrieval. We remind defendants that in enacting § 2896(a), the Legislature determined telecommunications customers are entitled to information sufficient to permit them to make informed choices. We caution defendants to ensure their future training on voicemail disclosures is not only consistently comprehensive, but uniformly followed. And consistent with our directive to defendants to clarify their tariffs, we caution them to make these disclosures in clear, unambiguous language, and to avoid explanations which use technical jargon or unexplained technical names.