7. Assignment of Proceeding
Carl W. Wood is the Assigned Commissioner and Jean Vieth is the assigned ALJ in this proceeding.
1. From January 1, 2000 through April 30, 2002, Cingular's official corporate policy in California prohibited refunds or returns after execution of a contract for service and imposed an ETF of $150 for early contract cancellation; some of Cingular's agents imposed an additional ETF of as much as $400, which increased the total ETF to as much as $550.
2. Cingular concedes that the best way for a customer to assess whether wireless service meets that customer's needs is to use the phone.
3. Cingular's customer growth and an increase in minutes of use per customer between January 2000 and the end of 2001 led to ongoing network coverage and capacity problems during that period and into 2002. The record as a whole demonstrates that these problems were greatest during the early part of 2001.
4. In spite of known network problems, in 2001 Cingular advertised and marketed its services heavily without disclosing its network problems to customers and without modifying its official no return/no refund/ETF policy.
5. At the point of sale, customers could not obtain detailed coverage and capacity information, including the likelihood of outdoor, in-vehicle or in-building coverage at a given location or within a larger area, since Cingular's sales agents did not have such information and Cingular's maps showed rate areas, not coverage areas.
6. Cingular's customer service representatives did not have ready access to detailed coverage and capacity information, including the likelihood of outdoor, in-vehicle or in-building coverage but had to contact radio frequency engineers to obtain it, which typically took a day or two at a minimum.
7. Cingular invested $1.6 billion in its California infrastructure between 2000 and 2002; 20% was spent in 2000, 30% in 2001 and the final 50%, in 2002.
8. Cingular promotes a consistent image for its exclusive agents so that all such agents' stores or kiosks have the same "look and feel." Cingular permits agents and dealers to use its "Cingular Jack" logo and other brand identification in advertising and marketing materials.
9. Once Cingular determined to implement its new ETF policy, effective May 1, 2002, it required agents and dealers to execute an "Amendment to Agency Agreement Re Phone Return Policy," which requires such entities to honor the new policy as of that date.
10. Cingular concedes that the law of agency applies to its relationships with its sales agents.
11. Caceres and the customer witnesses provide firsthand, verified statements and sworn testimony about problems with Cingular's service. These witnesses' stories are not equally specific nor do they relate equally egregious facts, but they are largely credible.
12. Cingular's evidence lends credibility to and, in some cases, validates, portions of other, albeit unverified, data sources offered by CPSD and UCAN to document customer dissatisfaction with Cingular.
13. Cingular waived part or all of its ETF (which did not include its agents' ETF) for an undetermined number of customers who happened to attempt to cancel their contracts within the first 15 days, but the record includes little persuasive evidence that most eligible customers benefited from this policy.
14. The record includes no persuasive evidence that Cingular and its agents sold ineffective or defective wireless equipment.
15. Reparation of ETF payments to customers who can be identified will help to make them whole and will limit Cingular's unjust enrichment from ETF receipts.
16. A fine is appropriate to punish Cingular for its failure to disclose system capacity problems during the period February 1, 2001 through April 30, 2001 and its continuing promotion of sales when the only remedy available to a customer sold a non-functional phone was to pay an ETF.
17. The degree of customer satisfaction with Cingular service during the January 2000 to May 2002 period cannot be determined from the record.
18. Wireless service cannot be guaranteed, given the physics of radio energy, but Cingular (like all wireless carriers) has detailed engineering information that can estimate the degree of outdoor, in-vehicle and in-building coverage.
19. This record does not supply a comprehensive assessment of the range of methods for disseminating useful coverage and capacity information, the comparative utility costs and the associated timelines
1. The record establishes, by a preponderance of the evidence, that Cingular has committed the violation described in Conclusion of Law 2.
2. From January 1, 2000 to April 30, 2002, Cingular's official no return/no refund/ETF policy constituted an unfair practice that failed to provide adequate, just, and reasonable service to those customers whose phones were functionally useless to them, in violation of § 451.
3. Under the law of agency, Cingular is legally responsible for ETFs charged by its agents between January 1, 2000 and April 30, 2002.
4. In order to avoid unjust enrichment to Cingular and provide reasonable reparation to as many deserving customers as possible, Cingular should be required to reimburse, with interest, those customers who paid Cingular or its agents partial or full ETFs for to cancel contracts into between January 1, 2000 and May 15, 2002 within fourteen (14) days of entering them. Cingular should prepare and file a refund plan in conformance with today's decision.
5. Imposition of a monetary fine in addition to the reimbursements to customers who paid ETFs is appropriate considering the totality of the circumstances surrounding Cingular's failure to disclose known network problems in the spring of 2001. A fine of $10,000 per day for each day from February 1, 2001 through April 30, 2001 should be imposed as a penalty for this offense.
6. Binding judicial precedent holds that the Commission lacks jurisdiction to adjudicate the UCL in the Business and Professions Code; accordingly, the Commission lacks jurisdiction to order remedies under the UCL.
7. Because the Song-Beverly Consumer Warranty Act and the Consumer Legal Remedies Act, both codified in the Civil Code, require aggrieved persons to bring actions in the courts for redress, we lack jurisdiction to adjudicate them or order remedies under them.
8. Since the record does not establish that Cingular or its agents sold faulty wireless equipment, we need not resolve whether the Commission has jurisdiction to adjudicate the implied warranty provisions in Com. Code § 2314-2316.
9. Since the record does not establish that Cingular or its agents sold faulty wireless equipment, and since we can assess Cingular's culpability for imposing an unjust and unreasonable ETF and for disclosure failures under §§ 451 and 2896, we do not need to inform our decision making by considering the Song-Beverly Consumer Warranty Act, the Consumer Legal Remedies Act or the UCL. Our decision not to consider those acts does not violate Northern California Power Agency v PUC, 5 Cal.3d 370 (1971).
10. Since the OII's Ordering Paragraphs cannot reasonably be interpreted to provide notice to Cingular of charges under Bus. and Prof. Code 17026.1(b) or Civ. Code § 1671, we disregard these arguments in the parties' briefs.
11. In order to protect customers, provide certainty to the parties and promote an efficient use of the resources of the parties and of the Commission, this decision should be effective immediately.
IT IS ORDERED that:
1. Within 75 days of date the date this POD is mailed to the service list, Cingular shall file a refund plan for accomplishing customer reparations, as further described in Ordering Paragraph 3. The refund plan shall estimate the total refunds due and shall describe the methodology for locating all customers (including prior customers) eligible for reparations. The refund plan shall be served on the service list for this proceeding and a copy shall be provided to the Director of the Commission's Telecommunications Division so that the Division may monitor implementation of the plan.
2. The goal of the refund plan described in Ordering Paragraph 2 shall be to:
(a) return, with interest, any sums received for early cancellation of contracts entered into between January 1, 2000 and April 30, 2002, to the customers who paid those sums to Cingular or to Cingular's sales agents within fourteen (14) days of entering their contracts; and
(b) return, with interest, any sums received for early cancellation of contracts entered into between February 1, 2001 and April 30, 2001.
Interest due shall be calculated at the rate of prime, three-month commercial paper, as reported in Federal Reserve Statistical Release G.13.
3. Cingular shall pay the sum of $890,000 to the State of California General Fund within 45 days after this decision is mailed to the general service list. Proof of payment shall be filed and served on the service list and provided to the Executive Director of the Commission with five days of payment.
4. This proceeding is closed.
This order is effective today.
Dated ____________________, at San Francisco, California.
I certify that I have by mail this day served a true copy of the attached Proposed Alternate Decision of Commissioner Kennedy on I.02-06-003 In the Investigation on the Commission's own motion into the operations, practices, and conduct of Pacific Bell Wireless LLC dba Cingular Wireless, U-3060, U-4135, and related entities (collectively "Cingular") to determine whether Cingular has violated the laws, rules and regulations of this State in its sale of cellular telephone equipment and service and its collection of an Early Termination Fee and other penalties from consumers, on all parties of record in this proceeding or their attorneys of record.
Dated August 5, 2004, at San Francisco, California.
Halina Marcinkowski |
Parties should notify the Process Office, Public Utilities Commission, 505 Van Ness Avenue, Room 2000, San Francisco, CA 94102, of any change of address to insure that they continue to receive documents. You must indicate the proceeding number on the service list on which your name appears.
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