ALJ/MCK/hkr DRAFT 3

9/20/01

Decision PROPOSED DECISION OF ALJ MCKENZIE (Mailed 8/21/2001)

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking on the Commission's own Motion into Competition for Local Exchange Service.

Rulemaking 95-04-043

(Filed April 26, 1995)

Order Instituting Investigation on the Commission's own Motion into Competition for Local Exchange Service.

Investigation 95-04-044

(Filed April 26, 1995)

James B. Young, Gregory L. Castle, Attorneys at Law, for Pacific Bell Telephone Company, and Lee Burdick, Attorney at Law, for Cox California Telcom., L.L.C., intervenors.

INTERIM DECISION RELIEVING PACIFIC BELL TELEPHONE
COMPANY AND COX CALIFORNIA TELCOM., L.L.C. OF OBLIGATION
TO UNDERTAKE ADDITIONAL MEASURES TO RECLAIM TAINTED
SAN DIEGO DIRECTORIES, AND OPENING PENALTY PHASE

TABLE OF CONTENTS

Title Page

INTERIM DECISION RELIEVING PACIFIC BELL TELEPHONE COMPANY
AND COX CALIFORNIA TELCOM., L.L.C. OF OBLIGATION
TO UNDERTAKE ADDITIONAL MEASURES TO RECLAIM
TAINTED SAN DIEGO DIRECTORIES,
AND OPENING PENALTY PHASE 2

Introduction and Summary 2

Background 3

The June 12 Hearing on the Reclamation and Reprinting Plan 6

Cox's Offer to Customers Whose Listings Were Erroneously Published 7

Efforts to Retrieve the Tainted Directories and the Evolution
of the Survey Proposal 8

The Results of the Field Research Survey 11

Discussion 13

The Next Phase of This Proceeding Should Deal With Penalties 15

Comments on Draft Decision 21

Findings of Fact 21

Conclusions of Law 26

ORDER 28

Introduction and Summary

This decision brings to a close the special phase of this proceeding that began on June 2, 2000, when Commission President Loretta Lynch issued a President's Ruling Granting Motion for a Temporary Restraining Order (TRO Ruling) in this docket. The TRO had been sought by Cox California Telcom., L.L.C. (Cox), which alleged that Pacific Bell Telephone Company (Pacific) had wrongfully resumed the distribution of "tainted" white pages directories for South and East San Diego County. The directories were considered tainted because, as a result of processing errors, they contained the numbers of Cox

customers who had requested unlisted or non-published numbers. The TRO Ruling directed Pacific to "cease all deliveries of these directories until further notice by [the Commission,] or until a ruling is issued on Cox's motion for a preliminary injunction, whichever occurs first." (Mimeo., p. 1.)

Cox and Pacific reached a settlement of their dispute on June 8, 2000, so the preliminary injunction hearing was never held. Instead, on June 12, 2000, the Commission heard testimony on the Cox-Pacific plan to reclaim the tainted directories, and then print and distribute new, corrected directories.

For the reasons set forth below, we conclude that the reclamation effort carried out by Pacific and Cox during the Summer of 2000 has apparently achieved as good a result as could reasonably be expected. Further, we agree that based on a survey conducted for Cox and Pacific by Field Research Corporation (Field Research), there is good cause to believe that the number of tainted directories removed from circulation is in fact much higher than the results of the formal retrieval effort would suggest. Under these circumstances, we agree with Pacific and Cox that little would be gained by ordering them to undertake further retrieval efforts at this time.

However, our decision not to order additional retrieval efforts is not the end of this matter. Based on the declarations submitted in connection with the TRO Ruling, there is good cause to believe that both Cox and Pacific failed to meet their respective obligations under the Public Utilities Code and decisions of this Commission. In Pacific's case, it appears that the utility's decision knowingly to resume distribution of the tainted directories on May 31, 2000 constituted a violation of Section 2891.1 of the Public Utilities Code. In Cox's case, there appears to have been a failure to use ordinary care in checking the directory listings that Cox forwarded to Pacific.

In view of these shortcomings, it is appropriate to open a new phase of this proceeding to determine what penalties, if any, should be imposed on Pacific and Cox. We also recognize, however, that because of the urgency of the circumstances presented by Cox's TRO motion, neither Cox nor Pacific has yet had a full opportunity to defend its conduct in the period leading up to the TRO Ruling. Thus, in addition to considering appropriate penalties, the new phase of this proceeding will afford both Pacific and Cox an opportunity to present any defenses they may have to the apparent violations of law identified at the end of this decision.