2. Procedural History

This proceeding consolidates a petition by the Office of Ratepayer Advocates (ORA) and 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 petition and complaints allege that Pacific Bell has violated various statutes and Commission orders. The complaints specifically 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 by 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.

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.

2.1.3. Resolution of Requests

Rule 84 of the Rules of Practice and Procedure allows a party to file a Petition to Set Aside Submission. Such a petition, however, must supply facts 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 POD

This decision makes minor modifications to the POD. Specifically, we (1) revise the language in findings on "The Basics" to more closely link our findings to Tariff Rule 12; (2) add a footnote in the Caller ID discussion; (3) modify the discussion of marketing to ethnic customers to limit the finding to the facts presented in this case; and (4) clarify our calculation of the fine. In addition to these textual modifications, in this section, we address (1) Greenlining's request that we make findings regarding violations of the Business and Professions Code; (2) Pacific Bell's assertion that the record contains insufficient evidence of customer complaints; and (3) removal of the Consumer Education Fund.

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. Greenlining does not identify any remedy, outcome, or effect of such findings.

Section 17200 of the Business and Professions Code is part of the statutory scheme prohibiting "unlawful, unfair, or fraudulent" business activities. The statute "borrows" violations of other laws and treats them as unlawful practices independently actionable under this section. Peters v. Saunders, 58 Cal. Rptr. 2d 690, 702 (1996). The statute also makes clear that "unfair" practices are actionable "even if not proscribed by some other law." Cal-Tech Communications v. LA Cellular, 20 Cal.4^th 163, 180 (1999). Business and Professions Code § 17203 authorizes a court of competent jurisdiction to enjoin any further violations of the statute. In addition, the Attorney General, district attorneys, and certain city and county attorneys may bring actions for injunctive relief and civil penalties. (Business and Professions Code, §§ 17204, 17206.)

Remedies for violations of Business and Professions Code § 17200 are in addition to any other remedies. Business and Professions Code § 17205 provides that: "[u]nless otherwise provided, the remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state."

Business and Professions Code § 17500 prohibits "deceptive, false, and misleading" advertising. The statute also provides for fine of $2,500 per violation and six months in jail.

Greenlining argues that the factual findings and legal conclusions in the decision are sufficient to support a conclusion that Pacific Bell has violated these two sections of the Business and Professions Code, and that the Commission should make that conclusion explicit.

Greenlining notes that while this proceeding was pending at the Commission, the District Attorney for Alameda County (DA), joined by several DAs, filed a complaint on behalf of the People of the State of California against Pacific Bell and its corporate affiliates based on allegations essentially identical to those at issue in this proceeding. Like the complainants, the DA alleged that Pacific Bell had violated, among other things, §§ 17200 and 17500 of the Business and Professions Code. On December 6, 1999, the Superior Court of Alameda County issued an order that sustained Pacific Bell's demurrer to the complaint on the grounds of lack of subject matter jurisdiction. The Superior Court concluded that it "lacks jurisdiction over the causes of action based on Business and Professions Code §§ 17200 and 17500 because they are in conflict with the Public Utilities Commission's regulatory powers." People v. Pacific Bell, et al, No.816635-9, (Dec. 6, 1999). The Superior Court's order cited Public Utilities Code § 1759³ and the Covalt decision.⁴

The Commission's regulatory authority stems from the Public Utilities Code, and grants this Commission broad regulatory power over Pacific Bell. Pursuant to this authority, the Commission has established long-standing and detailed requirements for Pacific Bell, and other public utilities, with respect to representations made to customers about tariffed services. As the remedies ordered in this decision demonstrate, the Public Utilities Code provides various remedies to rectify nonconformance with its requirements. This decision represents our disposition of the Public Utilities Code issues brought before us.

Separately from the Public Utilities Code, the Business and Professions Code is a complex set of statutes that addresses broad ranges of commercial activities, and has its own set of remedies. The Superior Court appears to have deferred to our Public Utilities Code authority and is not awaiting Business and Professions Code findings from us. Having exercised our regulatory jurisdiction under the Public Utilities Code, we deem it appropriate in this case to defer to the courts' expertise regarding the Business and Professions Code violations that Greenlining alleges. Consequently, we do not preclude any remedy that might be available from some other agency or court based on a violation of that code. All such remedies are cumulative, as provided in Business and Profession Code § 17205.

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, ⁵ 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).)

2.2.3. Consumer Education Fund

The POD ordered Pacific Bell to place $29 million in a Customer Education Fund. The POD also created a Customer Education Program that provided an administrative mechanism for distributing the Fund to applicants recommended by the fund administrator and approved by the Commission. The Program called for direct involvement of the following Commission staff: the Director of the Telecommunications Division, the Public Advisor, the General Counsel, and one person designated by the Commission President. The Program included Project Funding Criteria based on broad customer education objectives.

Upon further reflection, the uncertain effectiveness of the projects that may be funded does not justify the administrative burden created by the Program. For this reason, the requirement that Pacific Bell place $29 million into the fund has been removed from this decision. As we previously treated the Customer Education Fund amount as a component of the penalty calculation, the fine has been increased by the same amount, $29 million.