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IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 31844
JOSEPH B. MC NEAL D/B/A PAGEDATA
Petitioner- Appellan t Boise February 2006 Term
2006 Opinion No. 34
IDAHO PUBLIC UTILITIES
COMMISSION and QWEST
CORPORATION
Filed: March 22, 2006
Stephen W. Kenyon, Clerk
Respondents.
Appeal from the Idaho Public Utilities Commission. Commissioner Paul
Kj ell ander, presiding.
The decision of the Public Utilities Commission is affinned in part and
remanded.
Joseph B. McNeal, pro se appella11t.
Honorable Lawrence G. Wasden, Attorney General, Boise, for respondent
Idaho Public Utilities Commission. Donovan E. Walker argued.
Batt & Fisher LLP, Boise, for respondent Qwest Corporation. John R.
Hammond, Jf. argued
SCHROEDER, Chief Justice.
FACTUAL AND PROCEDURAL BACKGROUND
On February 27, 2003, Qwest and PageData jointly filed an application to adopt a
previously approved Interconnection Agreement between Qwest and Arch Paging, which
the Commission approved in Order No. 29198, issued on February 25 2003. The Qwest-
PageData Interconnection Agreement contained a dispute resolution provision at Section
13 .14. The dispute provision provides:
If any claim, controversy or dispute between the Parties, their agents,employees, officers, directors, or affiliated agents ("Dispute ) cannot besettled through negotiation, it shall be resolved by arbitration under the
then current rules of the American Arbitration Association ("AAA"Thearbitration 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 US.C. Sees. 1-, not state law, shallgovern the arbitrability 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. Theprevailing Party, as detennined 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 beconstrued to waive or. limit either Party's right to seek relief from the
Commission or the FCC as provided by state or federal law.
(Emphasis added).
On October 31 , 2003 , PageData filed a complaint with the Commission alleging
that Qwest was not in compliance with the reciprocal compensation provisions of the
Qwest-PageData Interconnection Agreement. Qwest filed a limited response to
PageData s complaint requesting that the Commission dismiss PageData s complaint
because the dispute resolution provision in the parties' Interconnection Agreement called
for arbitration. PageData filed a reply and subsequently filed a request for summary
judgment. On January 19, 2005, the Commission issued Order No. 29687, in which it
dismissed PageData s complaint detennining that "the arbitration process is the first and
foremost method for resolving disputes under the Interconnection Agreement."
PageData filed a Petition for Reconsideration in which it argued that the
Commission s ruling makes the dispute resolution clause of the Interconnection
Agreement unconscionable, asserting that the Commission should hold a hearing
pursuant to r.c. 9 28-302 so that the parties' could present evidence on the issue of
unconscionability. Further, PageData argued that there is no mechanism in Idaho statutes
to incorporate a private AAA arbitration decision into filed interconnection agreements to
make the decision publicly available to other carriers under Section 252(i) of the 1996
Telecommunications Act.
The Commission denied PageData s Petition for Rehearing, rIDding that I.C. 9
28-302 is inapplicable because it grants jurisdiction to the courts, not the Commission;
the interpretation of contracts generally lies with the courts and not the Commission; the
arbitration clause in Section 13.14 is neither procedurally or substantively
unconscionable; and, the Commission found itself "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." PageData appealed, maintaining that
the Commission erred in granting the motion to dismiss and in "blue penciling" the
Interconnection Agreement, asserting that Qwest is contractually bound to accept
PageData s selected method of relief and that a hearing should have been conducted on
the unconscionability of the arbitration clause.
II.
STANDARD OF REVIEW
Article V, Section 9 of the Idaho Constitution provides this Court with
jurisdiction to review any order of the Public Utilities Commission. The scope of the
review is limited by I.c. 961-629 which states in relevant part:
No new or additional evidence may be introduced in the Supreme Court
but the appeal shall be heard on the record of the commission as certified
by it. The review on appeal shall not be extended further than to
determine whether the commission has regularly pursued its authority,
including a determination of whether the order appealed from violates any
right of the appellant under the constitution of the United States or the
state of Idaho. Upon the hearing the Supreme Court shall enter judgment
either affirming or setting aside in part the order ofthe commission.
With regard to questions of law review of Commission orders is limited to a
detennination of whether the Commission has regularly pursued its authority and whether
the constitutional rights of the appellant have been violated. In re Jay Hulet s Complaint
Regarding Idaho Power Company s Irrigation Buy-Back Program 138 Idaho 476, 65
3d 498 (2003). With regard to questions of fact this Court will sustain the
Commission s determinations unless it appears that the clear weight of the evidence is
against its conclusions or that the evidence is strong and persuasive that the Commission
abused its discretion. Id. Finally, "It is a well-settled rule that in an appeal from the
commission matters may not be raised for the fITst time on appeal and that where the
objections were not raised in the petition for rehearing, they will not be considered for the
first time by this court.Eagle Water Co. v. Idaho PUC 130 Idaho 314 316-940
P.2d 1133, 1135-36 (1997) (quoting Key Transp., Inc. v. Trans. Magic Airlines Corp.
Idaho 110, 112-, 524 P.2d 1338, 1340-41 (1974)).
ill.
THE COMMISSION HAS THE AUTHORITY, UNDER FEDERAL
AND STATE LAW, TO INTERPRET AND ENFORCE
INTERCONNECTION AGREEMENTS AND DID SO IN BOTH
OF ITS ORDERS BEFORE THIS COURT
A threshold issue is whether the Commission has the authority to interpret and
enforce interconnection agreements or whether such agreements are outside the scope of
the Commission, subject only to interpretation and enforcement by the courts. PageData
argues interconnection agreements may be interpreted and enforced by the Commission.
Qwest argues to the contrary.The Commission agreed with Qwest.Federal law
indicates that a Commission does have the authority to interpret and enforce an
interconnection agreement: In the Matter of Star power Communications, LLC Petition
In the briefs on appeal there has been some argument between PageData and the Commission
as to the standard of review. PageData has made arguments to the effect that Commission orders are
subject to de novo review when entities are deprived of their statutory rights. The Commissionhowever, has stated that: "Contrary to PageData s assertions, the Orders of the Commission are not
subject to de novo review. PageData does not offer any authority for its position.
PageData is correct that a decision of a commission can be subject to de novo review - but not
before this Court - it is before a federal court that a de novo standard is used. The Second Edition of theAmerican Jurisprudence advises in its Telecommunications section:
Federal courts review de novo a decision of the state public utilities commission as to whether
interconnection agreements between local exchange carriers comply with the Telecommunications
Act and implementing regulations, and consider all other issues under an arbitrary and capricious
standard. (FN9J
74 Am. Jur. 2d Telecommunications 926. As authority for this statement, American Jurisprudence cites tothe following cases in Footnote 9:
Southwestern Bell Telephone Co. v. Waller Creek Communications, Inc.221 F.3d 812 (5th Cir.
2000); Southwestern Bell Telephone Co. v. Public Utility Comm 'n of Texas 208 F.3d 475 (5th Cir.
2000); US West Communications, lnc, v. Washington Utilities and Transp. Comm '255 F.990 (9th Cir. 2001); US West Communications, Inc. v. Hamilton 224 F.3d 1049 (9th Cir. 2000); as
amended on reh'g, (Sept. 13, 2000); Southwestern Bell Telephone Co. v. Brooks FiberCommunications of Oklahoma, Inc.235 F.3d493 (lOth Cir. 2000).
for Preemption of Jurisdiction of the Virginia State Corporation Commission Pursuant to
Section 252(e) of the Telecommunications Act of 1996, 15 F.R. 11277, 11282, n. 13
(2000) (citing Southwestern Bell Telephone Co. v. Public Utility Commission of Texas
208 F.3d 475 (5th Cir. 2000):
(TJhe Act's grant to the state commissions of plenary authority to approve
or disapprove these interconnection agreements necessarily carries with it
the authority to interpret and enforce the provisions of agreements that
state commissions have approved.
Idaho case law indicates in general that contract interpretation is for the courts, not the
Commission, but has not determined that interpretation and enforcement of an
interconnection agreement is solely for the courts. The cases have been careful to use
words such as "generally" and "nonnally" and also, to provide for exceptions to the
norm. 1'1 Lemhi Telephone Co. v. Mountain States Telephone Telegraph Co.98 Idaho
692, 696 , 571 P.2d 753, 757 (1977), this Court stated: "Generally, construction and
enforcement of contract rights is a matter which lies in the jurisdiction of the courts and
not in the Public Utilities Commission." In Idaho Power Co. v. Cogeneration, Inc.134
Idaho 738, 748, 9 P.3d 1204, 1214 (2000), this Court cited Afton Energy Inc. v. Idaho
Power Co.111 Idaho 925, 929, 729 P.2d 400, 404 (1986), stating: "Questions of
contract interpretation and enforcement are normally the sole province of the courts.
Because of federal law interconnection agreements fall outside the nonn.
In this case the Commission did interpret and enforce the Interconnection
Agreement. The Commission s decision contemplated what was meant by the word
shall" as it concerns arbitration and concluded that this was the "first and foremost"
method of dispute resolution that the parties were to use.
Unfortunately, the provisions in Section 13.14 are inconsistent and defy
rationalization. In the beginning arbitration is specified as the method of dispute
resolution, followed by the contrary provision that
, "
Nothing in this Section shall be
construed to waive or limit either Party's right to seek relief from the Commission or the
FCC as provided by state or federal law." Neither party, nor the Court, has been able to
give both of these provisions meaning without conflict with the other. The Commission
found arbitration to be the first and foremost method of dispute resolution under the
agreement, in effect interpreting the agreement despite language that contract
interpretation is for the courts. This is one of the instances in which the Commission
does have the right to interpret a contract.
In this instance the Commission s interpretation is the same as the Court's so far
as detennining that arbitration must be pursued first in the dispute r~solution. While the
last sentence of Section 13.14 would indicate to the contrary, the arbitration language is
specific, extensive and mandatory. To rule otherwise would render that provision
without mearili'lg. The arbitration provision is mandatory, and to give it meaning it must
remain mandatory. On the other hand there may be some residual meaning to the last
sentence of Section 13.14 even if arbitration is mandatory. In the wake of arbitration
there may be a role for the Commission to play in interpreting the agreement or
detennining whether the arbitration decision is consistent with federal and state
regulation. The Commission and the Court's decision is not without logical difficulties
but it is the best that can be done with an agreement drafted as if no one read the
paragraph from start to finish.
In view of the Court's conclusion that the Commission may have a role to play
after arbitration an outright dismissal of PageData s claim was inappropriate. Further
action on the claim should have been stayed rather than dismissed. Whether there is a
role for the Commission to play after arbitration is a question to be decided later, if
necessary.
IV.
REMAINING ISSUES
There are other issues that have been raised.
PageData s argument for use of the Idaho Rules of Civil Procedure
moot as it is being raised for the first time on appeal. Nevertheless
the Commission has its own rules of procedure.
PageData argues that the Commission should have used the Idaho Rules of Civil
Procedure. This argument may not be raised for the first time on appeal. See Eagle Water
Co. v. Idaho PUC 130 Idaho 314, 316-, 940 P.2d 1133 , 1135-36 (1997).
Nevertheless, for clarity, LC. 9 61-601 states that: "All hearings and investigations
before the commission or any commissioner shall be governed by this act and by rules of
practice and procedure to be adopted by the commission. . . ." The Commission has its
own Rules of Procedure which addresses late filings and non-answers to complaints in
the following manner:
A party that fails to answer a complaint or petition within the prescribed
time will be treated as generally denying the allegations of the complaint
or petition and will be precluded, except for good cause shown, fromsetting up any affinnative defense in the proceeding. In these cases, the
Commission may proceed with the matter solely upon the issues set forth
in the complaint or petition. The complainant or petitioner must offer
evidence of its allegations regardless of whether the complaint or petition
is answered or denied.
IDAPA 31.01.01.057.02(b). Finally, as stated in I.R.C.P. l(a), the Idaho Rules of Civil
Procedure apply to the courts, of which the Commission is not:
These (LR.C.) rules govern the procedure and apply uniformly in the
district courts and the magistrate s divisions of the district courts in the
state of Idaho in all actions. . .
PageData s claim for application of the Rules of Civil Procedure in the Commission is
without merit.B. There is no impediment to filing an arbitration decision.
One of the bases upon which PageData resists arbitration is the claim that there is
no authority to file an arbitration decision with the Commission, consequently precluding
issues determined in it from being incorporated in this and other interconnection
agreements.PageData has cited no Idaho statutes or case law as authority for its
contention that there is an impediment to filing an arbitration decision, citing to prior
orders of the Commission. However
, "
(bJecause regulatory bodies perform legislative as
well as judicial functions in their proceedings, they are not so rigorously bound by the
doctrine of stare decisis that they must decide all future cases in the same way as they
have decided similar cases in the past." Rosebud Enterprises, Inc. v. Idaho PUC 128
Idaho 609 619, 917 P.2d 766, 776 (1996) (citing Intermountain Gas Co. v. Idaho PUC
97 Idaho 113, 119, 540 P.2d 775, 781 (1975). In this case the Commission has explicitly
stated that it knows of no impediment why PageData could not file such a decision.
Therefore, PageData s argument concerning this sub-issue lacks merit.
The Commission properly denied PageData s Petition for
Reconsideration.
PageData argues that LC. 9 28-302 requires the Commission to convene a
hearing so that the parties can present evidence regarding the unconscionability of the
arbitration clause.
When called upon to reVIew legislation, this Court has stated:The most
fundamental premise underlying judicial review. . . is that, unless the result is palpably
absurd, the courts must assume the legislature meant what it said. Where a statute is clear
and unambiguous the expressed intent of the legislature must be given effect." State
Dept. of Law Enforcement v. One 1955 Willys Jeep, 100 Idaho 150, 153, 595 P.2d 299
302 (1979). Where a statute or constitutional provision is clear we must follow the law
as written. Moses v. State Tax Comm '118 Idaho 676, 799 P.2d (1990); State v.
Ankney, 109 Idaho 1 , 704 P.2d 333 (1985); Herndon v. West 87 Idaho 335, 393 P.2d 35
(1964); John Hancock Mut. Life Ins. Co. v. Neill 79 Idaho 385, 319 P.2d 195 (1957).
Where the language is unambiguous, there is no occasion for the application of rules of
construction. Airstream, Inc. v. CIT Financial Serv., Inc.111 Idaho 307, 723 P.2d 851
(1986); Otteson v. Board ofComm 'rs of Madison County, 107 Idaho 1099 695 P.2d 1238
(1985); Worley Highway Dist. v. Kootenai County, 98 Idaho 925, 576 P.2d 206 (1978).
As stated in Utah Power Light Co. v. Idaho Public Utilities Comm '107 Idaho
, 52, 685 P.2d 276, 281 (1984): "It has been firmly established that the PUC has no
auth.ority not given it by statute." Idaho Code 9 28-302, cited by the Appellant before
the Commission on Rehearing and before this Court on appeal, is a part of the Idaho
Uniform Commercial Code and it provides:
(1) If the court as a matter oflaw finds the contract or any clause
of the 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.
(Emphasis added). The Commission is not a "court"
: "
(TJhe commission is an arm of
the legislative authority, and not a court of justice, within the meaning of Const. art. , 9
18.Natatorium Co. v. Erb 34 Idaho 209, 216, 200 P. 348, 350 (1921). The
unambiguous language of LC. 9 28-302 specifies a situation in which a court-not the
Commission-is to hear evidence regarding the unconscionability of a contract. Idaho
Code 9 28-302 is therefore inapplicable to the instant case. Regardless, the
Commission has the authority to interpret whether the arbitration clause was
unconscionable.In the Matter of Star power Communications LLC Petition for
Preemption of Jurisdiction of the Virginia State Corporation Commission Pursuant to
Section 252(e) of the Telecommunications Act of 1996, 15 F.c.C.R. 11277, 11279-
(2000), the FCC stated:
(IJnherent in state commissions' express authority to mediate , arbitrate
and approve interconnection agreements under section 252 is the authority
to interpret and enforce previously approved agreements. . . due to its role
in the approval process, a state commission is well-suited to address
disputes arising from interconnection agreements.
PageData argues that: (1) "The Commission s ruling makes the dispute resolution clause
(Section 13.14) of the interconnection agreement unconscionable. The Commission
ruling unreasonably limits PageData s choices for dispute resolution and significantly
advantages Qwest." (2) "The IPUC made the arbitration clause procedurally
unconscionable because the IPUC granted Qwest's motion to dismiss based on the
arbitration clause without holding a hearing." It is difficult to connect these assertions to
a claim of unconscionability. Nevertheless, the Commission interpreted the arbitration
tfiJ()~) 't)Jil~if3~'4)~~dt t1:9~~~~~wf~~ distinguishing this Court's prior ruling in Murphy v.
~J zsdl 1~~~H8J~~~'t:~~9 Idaho 330, 78 P.3d 766 (2003). The Commission
;~'
~~~i~'h~:w.The arbitration clause in this case does not mandate
:.:.-nuQ~~~tfst~1MRtmr(n!e claim found in Murphy.
..,
~E~ IS ~OT .eNTiTLED TO ATTORNEY FEES ON APPEAL
.; Thi Courth~s stated t ~ttorney fees will not be awarded where the losing party
brought the appeal in good faith and where a genuine issue of law was presented. Merrill
v. Gibson 139 Idaho 840, 846, 87 P.3d 949, 955 (2004) (citing Minich v. Gem State
Developers, Inc.99 Idaho 911 , 918, 591 P.2d 1078, 1085 (1979)). There is no losing
party; neither Qwest nor PageData has fully prevailed or lost. Also, PageData has raised
genuine issues of law regarding the Commission s interpretation and enforcement of an
interconnection agreement. Qwest was a participant in the drafting of this internally
inconsistent agreement. To award it attorney fees for an argument that one inconsistent
part of the agreement should prevail over another inconsistent part would add still
another fulomaly to this case, perhaps even encourage poor draftsmanship.
VI.
CONCLUSION
The Commission s decision that the PageData claim must go to arbitration is
affinned. The dismissal of the claim is vacated. The claim should be stayed pending the
outcome of the arbitration which may include filing of the decision as an amendment to
the interconnection agreement. Neither party is awarded costs or attorney fees.
Justices TROUT and BURDICK and Justices Pro Tem KIDWELL and
SCHILLING CONCUR.
f, Stephen W. Kenyon; Clerk 6f the S"Upreme Court
of the State of Idaho, , hereby certify that the
above;sa true and correct copy of the ~"'i??,r0'7
entered in the above CIU88 Md now On
I8COI'd In "-Y office. d...,&
WtTNESSmy
~....
the SIll-Of this Cou~..6~
STEPHEN W. KENYON
CI8ftc
By.
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