20050309Reconsideration Order No 29726.pdf

Office of the Secretary
Service Date
March 9, 2005
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
JOSEPH B. McNEAL, DBA P AGED A T A,
CASE NO. QWE- T -03-
COMPLAINANT
vs.
QWEST CORPORATION, INC.,ORDER NO. 29726
RESPONDENT.
In October 2003 Joseph McNeal dba PageData filed a Complaint against Qwest
Corporation. PageData alleged that Qwest was not in compliance with the reciprocal
compensation provisions of their current Interconnection Agreement. Qwest responded that the
Complaint should be dismissed because the parties ' Interconnection Agreement contains an
arbitration clause. Qwest argued that the dispute should be resolved through arbitration.
January 19, 2005, the Commission issued Order No. 29687 declining PageData s invitation to
resolve its interconnection dispute with Qwest.Because the approved Interconnection
Agreement contains an arbitration clause, the Commission found that "the arbitration process is
the first and foremost method for resolving disputes under (their J Interconnection Agreement."
Order No. 29687 at 6. Consequently, the Commission dismissed the Complaint without
prejudice.
On February 9, 2005 , PageData filed a timely Petition for Reconsideration. PageData
primarily asserts that the Commission erred in declining to resolve the complaint because the
arbitration clause is unconscionable. After reviewing PageData s Petition, the Commission
denies reconsideration as explained in greater detail below.
BACKGROUND
The procedural history of this case is contained in Order No. 29687. Briefly, on
February 7, 2003 Qwest and PageData jointly filed an Application to adopt a previously
approved Interconnection Agreement between Qwest and Arch Paging, Inc. pursuant to 47
C. ~ 252(i). The Application notes that PageData and Qwest reached agreement "through
voluntary negotiation" to adopt the Arch-Qwest Agreement in its entirety. The parties
Agreement to adopt the amended Arch Interconnection Agreement was executed by both Qwest
ORDER NO. 29726
and Mr. McNeal dba PageData. The Commission approved the Qwest-PageData Interconnection
Agreement in Order No. 29198 issued February 25 2003.
PageData filed its Complaint against Qwest pursuant to the federal
Telecommunications Act of 1996 (47 D.C. ~ 251 et seq.and Section 13.14 ("Dispute
Resolution ) of its Interconnection Agreement. Complaint at 1. Section 13.14 provides in
pertinent part:
If any claim, controversy or dispute between the Parties, their agents
employees, officers, directors, or affiliated agents ("Dispute cannot be
settled through negotiation. it shall be resolved by arbitration under the then
current rules of the American Arbitration Association ("AAA"
).
The
arbitration shall be conducted by a single neutral arbitrator familiar with the
telecommunications industry and engaged in the practice of law.
. . .
The
Federal Arbitration Act, 9 D.C. Secs. 1-, not state law, shall govern the
arbitratability of all Disputes. The arbitrator shall not have authority to award
punitive damages. All expedited procedures prescribed by the AAA rules
shall apply and the rules used shall be those for the telecommunications
industry. The arbitrator s award shall be final and binding and may be entered
in any court having jurisdiction thereof. The prevailing Party. as determined
by the arbitrator. shall be entitled to an award of reasonable attorneys ' fees
and costs. The arbitration shall occur at a mutually agreed upon location.
Nothing in this Section shall be construed to waive or limit either Party s right
to seek relief from the (Idaho J Commission or the FCC as provided by state or
federal law.
~ 13., Qwest-PageData Interconnection Agreement (emphasis added).
THE COMMISSION'S PRIOR ORDER
In Order No. 29687 the Commission observed that the Interconnection Agreement
contains an arbitration clause at Section 13.14. This arbitration clause provides that any disputes
between the parties "shall be resolved by arbitration." Order No. 29687 at 5 (emphasis original).
Given the presence of the detailed arbitration clause in their Interconnection Agreement, the
Commission found that "the parties clearly contemplated utilizing arbitration when they cannot
resolve their dispute informally.Id. at 6. The Commission also noted that the Supreme Court
had recognized that arbitration "is a favored remedy for resolving disputes.Id. citing
International Assoc. of Firefighters, Local 672 v. City of Boise 136 Idaho 162, 30 P.3d 940
(2001). Although Section 13.14 does not limit the parties' right to seek relief from this
Commission or the Federal Communications Commission (FCC), the Commission found the
ORDER NO. 29726
presence of a detailed arbitration clause should be "the first and foremost method for resolving
disputes under the Interconnection Agreement." I d.
THE PETITION FOR RECONSIDERATION
PageData generally argues that the Commission erred in dismissing its Complaint in
reliance upon the arbitration clause in Section 13.14. The Company maintains the Commission
reliance on the arbitration clause is misplaced for two reasons. First, PageData "claims the
arbitration clause is unconscionable" and requests that the Commission schedule a hearing
pursuant to Idaho Code ~ 28-302. Petition for Reconsideration at 3. PageData requests a
hearing so that the parties may present evidence "to aid the Commission in making a
determination" whether the arbitration clause is unconscionable.
Second, even if the Complaint is referred to arbitration, PageData insists that Section
252(i) of the federal Telecommunications Act requires "that the resolution of a reciprocal
compensation dispute be filed
. .
. and available for adoption by other carriers.Id. at 2.
alleges there is "no mechanism in Idaho statutes" to make private arbitration decision
available for adoption by other carriers.Id. In addition, PageData suggests that the arbitration
decision must be approved by the Commission.
DISCUSSION AND FINDINGS
A. Unconscionability
PageData claims that the arbitration clause contained in its Interconnection
Agreement is unconscionable and requests that the Commission convene an evidentiary hearing
on that claim. The Company suggests that the arbitration fees imposed by the American
Arbitration Association s (AAA) commercial rules and the costs of arbitration are prohibitive.
Petition at 4. PageData s theory is the AAA arbitration fees and costs are so excessive that they
effectively remove arbitration as a remedy for resolving the parties' dispute. We find
PageData s argument unavailing for several reasons.
First PageData asserts that Idaho Code ~ 28-302 requIres the Commission to
convene a hearing so PageData may present evidence regarding the alleged unconscionability of
the arbitration clause. However, this statute does not confer jurisdiction upon this Commission.
Section 28-302 is part of the Idaho Uniform Commercial Code - Sales. Idaho Code ~ 28-
101. This section provides in pertinent part:
ORDER NO. 29726
(1) If the court as a matter of law finds the contract or any clause of th
contract to have been unconscionable at the time it was made the court may
refuse to enforce the contract, or it may enforce the remainder of the contract
without the unconscionable clause, or it may so limit the application of any
unconscionable clause as to avoid any unconscionable result.
(2) When it is claimed or appears to the court that the contract or any
clause thereof may be unconscionable the parties shall be afforded a
reasonable opportunity to present evidence as to its commercial setting,
purpose and effect to aid the court in making the determination.
Idaho Code ~ 28-302 (emphasis added). As is evident from the plain text of this section
arguments and evidence of unconscionability must be presented to a court - not the Commission.
As our Supreme Court noted in Natatorium Co. v. Erb the Commission is not a court of law. 34
Idaho 209, 200 P. 348 (1921).
Second, the construction and enforcement of contracts is generally "a matter which
lies in the jurisdiction of the courts and not the public utilities commission.Lemhi Telephone
Co. v. Mountain States Tel. Tel. Co.98 Idaho 692, 696, 571 P.2d 753 , 757 (1977); see also
Idaho Power Co. v. Cogeneration, Inc.134 Idaho 738, 9 P.3d 1204 (2000). Our Supreme Court
recognizes that there are exceptions to this general rule. One exception is where both parties
agree to let the Commission settle their contract dispute. Afton Energy v. Idaho Power Co.111
Idaho 925, 929, 729 P.2d 400, 404 (1986).1 In this case, Qwest objected to our involvement and
urges the Commission to decline to exercise jurisdiction. Qwest Response at 6-10. Thus, both
parties do not agree.
Third, for an arbitration provision to be voided as unconscionable, it must be both
procedurally and substantively unconscionable. Lovey v. Regence Blue Shield of Idaho 139
Idaho 37, 42, 72 P.3d 877, 882 (2003). "Procedural unconscionability relates to the bargaining
process leading to the agreement (or provision) while substantive unconscionability focuses
upon the terms of the agreement (or provision) itself." Id. However, the Court held that
arbitration clause that required each party to pay its own costs is not unconscionable. Id. at 45
72 P.3d at 885.
Our Supreme Court also recognizes that an arbitration clause "may be unenforceable
if large arbitration costs preclude the party from effectively vindicating the party s federal
statutory rights in the arbitral forum.Murphy v. Mid-West National Life Insurance Co.139
1 The other exceptions are not pertinent here.
ORDER NO. 29726
Idaho 330, 332, 78 P.3d 766, 768 (2003) quoting Lovey, 139 Idaho at 45, 72 P.3d at 885. This
concept is independent from the doctrine of unconscionability. In Murphy, the arbitration clause
in question required each party to pay for its own arbitrator and equally share the expenses of a
third arbitrator and all other expenses of arbitration. In addition, the arbitration agreement
provided that attorney fees and expenses for witnesses must be borne by the party incurring
them. Murphy, 139 Idaho at 332, 78 P.3d at 768. The arbitration provision in Murphy stands in
stark contrast to the arbitration provision contained in Section 13.14 of the parties
Interconnection Agreement. In particular, Section 13.14 provides for a single arbitrator and the
prevailing party "shall be entitled to an award of a reasonable attorneys ' fees and costs." Thus
the arbitration process encompassed in the Interconnection Agreement allows the prevailing
party to fully recover arbitration costs and attorney fees. We do not believe that the terms of
Section 13.14 render this arbitration provision unenforceable.
B. Filed Arbitration Decisions
We next turn to PageData s argument that there is "no mechanism in Idaho statute to
(file J a private AAA arbitration decision" with the Commission and make it publicly available to
other carriers for adoption under Section 252(i). We find this argument unpersuasive. Although
there may be no statutory mechanism to publish an arbitration decision, we are unaware of any
impediment why either party to the arbitration could not file such a decision as an amendment or
clarification to their Interconnection Agreement.Indeed, the Washington Utilities and
Transportation Commission recently ruled that both parties to an interconnection agreement bear
responsibility for filing the initial agreement with state commissions. Washington UTC
Advanced Telecom Group, et aI.Order No.7 at -0-0 3 , 14, 21 (Docket No. UT-033011 , June 2
2004); 2004 WL 1597624 (Wash. UTC). The Washington Commission also noted that other
state commissions have recognized that both parties to an interconnection agreement are
responsible for filing the agreement with state commissions. Id. at -0 23. While these decisions
deal primarily with interconnection agreements, we see no reason why they would not be
applicable to amendments or clarifications to interconnection agreements.
Finally, as we noted in our prior Order No. 29687, there is a strong public policy in
favor of arbitration and arbitration clauses.Here the parties "voluntarily negotiated" the
adoption of the Arch Interconnection Agreement in its entirety. While there is no dispute
concerning the Commission s authority to approve interconnection agreements, we decline to
ORDER NO. 29726
subsequently engage in interpretation and enforcement of this particular agreement that contains
an arbitration clause. Accord, Idaho Power Co. v. Cogeneration, Inc.129 Idaho 46, 921 P .
746 (1996). Consequently, we deny reconsideration.
ORDER
IT IS HEREBY ORDERED that PageData s Petition for Reconsideration is denied.
THIS IS A FINAL ORDER DENYING RECONSIDERATION.Any party
aggrieved by this Order or other final or interlocutory Orders previously issued in this case may
appeal to the Supreme Court of Idaho pursuant to the Public Utilities Law and the Idaho
Appellate Rules. See Idaho Code ~ 61-627.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of March 2005.
MARSHA H. SMITH, COMMISSIONER
ATTEST:
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Barbara Barrows
Assistant Commission Secretary
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ORDER NO. 29726