STATE OF CALIFORNIA GRAY DAVIS, Governor
PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
May 29, 2001
TO: PARTIES OF RECORD IN APPLICATION 00-02-014
Decision 00-12-053 was mailed on December 29, 2000, without the joint Dissent of President Loretta M. Lynch and Commissioner Carl Wood. Attached herewith is the Dissent.
Very truly yours,
/s/ LYNN T. CAREW
Lynn T. Carew, Chief
Administrative Law Judge
LTC:k47
Attachment
A.00-02-014
D.00-12-053
JOINT DISSENT OF COMMISSIONERS LYNCH AND WOOD
IN DECISION 00-12-053
The Commission's decision In re NetMoves (2000), Cal. P.U.C. Dec. No. (D.) 00-12-053, approves a financial transaction that contravenes the clear requirements of the Public Utilities Act. The transaction approved was, by operation of law, void. As this dissent explains in detail, this transaction cannot legally be approved by this Commission under ordinary circumstances. Just as it did in In re CRL Network Services, Inc. (2000) Cal.P.U.C. Dec. No. (D.) 00-09-033 and In re StormTel, Inc. (2000), D.00-09-035, the Commission has relied on inapplicable theories to support a result that is not legally valid.
This dissent is not based on the illegality of the transactions alone. We cannot associate ourselves with a decision that implicitly concludes that the convenience to utilities in structuring their business transactions is more important than the laws of this State. This Commission should approve transactions only when they are demonstrated to be in the public interest. In essence, this dissent, like the dissents in In re CRL Network Services, Inc. and In re StormTel, Inc., is based on our commitment to take this Commission, and the requirements it enforces, seriously.
1. Factual and Legal Background
NetMoves is a Delaware corporation authorized by this Commission to provide interexchange telecommunications services within California. Mail.com is a Delaware corporation that provides various e-mail services to the public, none of which is regulated by the Commission. The stock of Mail.com is traded on the Nasdaq stock exchange. On February 8, 2000, Mail.com acquired NetMoves. On February 10, 2000, NetMoves and Mail.com asked this Commission to approve their transaction pursuant to Public Utilities Code section 854, subdivision (a).
Public Utilities Code section 854 does not allow this Commission to approve business transactions that have already been completed. In fact, section 854 provides that a transaction that is completed before the Commission has approved it is void. Public Utilities Code section 854 subdivision (a) states in pertinent part (emphasis added):
No person or corporation, whether or not organized under the laws of this state, shall merge, acquire, or control either directly or indirectly any public utility organized and doing business in this state without first securing authorization to do so from the commission. The commission may establish by order or rule the definitions of what constitute merger, acquisition, or control activities which are subject to this section. Any merger, acquisition, or control without that prior authorization shall be void and of no effect. No public utility organized and doing business under the laws of this state, and no subsidiary or affiliate of, or corporation holding a controlling interest in a public utility, shall aid or abet any violation of this section.
This strict requirement ensures that "before any transfer of public utility property is consummated", the Commission will, "review the situation and to take such action, as a condition to the transfer, as the public interest may require." (San Jose Water Co. (1916) 10 CRC 56; see also, In re E. B. Hicks Water Company (1990) 37 CPUC2d 13.) In response to a March 17, 2000 ruling by the assigned Administrative Law Judge, NetMoves and Mail.com requested retroactive, "nunc pro tunc" authority for Mail.com's acquisition of NetMoves. That is, NetMoves and Mail.com requested that the Commission use legal or other powers to ensure that the Commission's approval of their merger would occur prior February 8, even though NetMoves and Mail.com requested that approval on February 10.
