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IN THE SUPREME COURT OF THE STATE OF ID~~G I G Prl 2: 21
!Ll jiG PuBLIC
,jTiLtTIES COr'1fy1!SStOt,
) SUPREME COURT
) DOCKET NO. 31844
BRIEF OF RESPONDENT
IDAHO PUBLIC UTILITIES
COMMISSION
JOSEPH B. McNEAL DBA P AGEDA T A
Petitioner-Appellant,
IDAHO PUBLIC UTILITIES COMl\tIISSION
AND QWEST CORPORATION,
Respondents.
APPEAL FROM THE IDAHO PUBLIC UTILITIES COMMISSION
Commissioner Paul Kjellander, Presiding
JOSEPH B. McNEAL
dba PageData
6610 Overland Road
Boise, ID 83705
LAWRENCE G. WASDEN
Attorney General
Petitioner-Appellant Pro Se
DONOV AN E. WALKER
DONALD L. HOWELL, II
Deputy Attorneys General
472 W. Washington S
Boise, ID 83702-5983
Attorneys for Respondent
Idaho Public Utilities Commission
WILLIAM J. BATT
Batt & Fisher
101 S. Capitol Blvd., 5th Floor
Boise, ID 83702
Attorney for Respondent
Qwest Corporation
TABLE OF CONTENTS
I. STATEMENT OF THE CASE ..................................................................................................
A. Nature of the Case...............................................................................................................
B. Course of Proceedings
........................................................................................................
C. Statement of Facts ............................................................................................................... 2
II. ADDITIONAL ISSUES PRESENTED ON APPEAL ............................................................. 7
III. ARGUMENT ........................................................................................................................... 8
A. Summary of Argument .......................................................................................................
B. Standard of Review.............................................. ...............................................................
C. The Commission Did Not Err When It Declined Jurisdiction and Dismissed PageData
Complaint Without Prejudice Because the Parties Were Required to Utilize the Arbitration
Provisions of Their Interconnection Agreement.....................................................................
D. The Commission Did Not Err When It Found that the Issue of Unconscionability and
Contract Interpretation is Best Left for the Courts. ................................................................
E. The Idaho Rules of Civil Procedure Do Not Apply to the Commission. .......................... 17
1. PageData May Not Raise Arguments for the First Time on Appeal.
..........................
2. The Idaho Rules of Civil Procedure Do Not Apply to the Commission. .................... 18
F. PageData Has Misinterpreted Section 252 of the Federal Telecommunications Act. ...... 19
1. Noting in 47 U.C. 9 252 Gives the Commission "Exclusive Rights" to
ResolveDisputes Under Approved Interconnection Agreements.
....................................
2. There is No Statutory Impediment to Filing an Arbitration Decision with the
Commission. .....................................................................................................................
IV. CON C L US ION. ..
.. . . .. . .. . . . . .. .. . .. .. .... .. .. .. .... .. .. .. .. .. .. .. . .. .. .. .. . .. .. .. .. . . .. . .. .. . . .. .. .. . .. . .. . .. . .. . . .. .. .. .. .. .. . ...
2 1
APPENDIX A IPUC Order No. 29687 , R. Vol. I p. 210-16............................................... Tab A
APPENDIX B IPUC Order No. 29726, R. Vol. I p. 224-29 ................................................Tab B
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TABLE OF AUTHORITIES
Cases
A. W Brown Company v. Idaho Power Co., 121 Idaho 812, 828 P.2d 841 (1992).............
Afton Energy v. Idaho Power Co., 111 Idaho 925, 729 P.2d 400 (1986) .....................................
Application of Boise Water Corp., 82 Idaho 81 , 349 P.2d 711 (1960) ......................................... 10
Bel/south Telecommunications, Inc. v. MCIMetro Access Transmission Svs., Inc.
317 F.3d 1270 (11th Cir. 2003) ................................................................................................ 20
Boise Water Company v. Idaho PUC 128 Idaho 534, 916 P.2d 1259 (1996) ............................. 10
Eagle Water Company v. Idaho PUC 130 Idaho 314, 940 P.2d 1133 (1997)....................... 10,
Green Tree Financial Corp. v. Bazzle 539 U.S. 444, 123 S.Ct. 2402 (2003) .............................
Hulet v. Idaho PUC, 138 Idaho 476, 65 P.3d 498 (2003)......................................................... 9 , 10
Idaho Power Co. v. Cogeneration, Inc.134 Idaho 738 , 9 P.3d 1204 (2000) ........................ 13, 16
Industrial Customers of Idaho Power v. Idaho PUC
134 Idaho 285 , 1 P.3d 786 (2000).........................................................................................
International Assoc. of Firefighters v. City of Boise
136 Idaho 162, 30 P.3d 940 (2001)...........................................................................................
Key Transp., Inc. v. Trans Magic Airlines Corp.
96 Idaho 110 524 P.2d 1338 (1974)................................................................................... 10, 18
Lemhi Telephone Co. v. Mountain States Tel. Tel. Co.
98 Idaho 692, 571 P.2d 753 (1977)............................................................................... 13 , 16
Lovey v. Regence Blueshield of Idaho 139 Idaho 37, 72 P.3d 877 (2003) .................................. 14
McKay v. Boise Project Board of Control 141 Idaho 463, 111 P.3d 148 (2005) ........................
Murphy v. Mid-West National Life Ins. Co., 139 Idaho 330, 78 P.3d 766 (2003)............ 15 , 16, 17
Natatorium Company v. Erb 34 Idaho 209, 200 P. 348 (1921) ............................................. 16, 18
Rosebud Enterprises v. Idaho PUC, 128 Idaho 609, 917 P.2d 766 (1996) ...................... 10
Shawver v. Huckleberry Estates, LLC.140 Idaho 354, 93 P.3d 685 (2004) .............................
Constitutional Provisions
Idaho Const., Art. 5 , 9 9 ..................................................................................................................
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Statutes
9 V.C. 9 1-16 ................................................................................................................... 4, 11 , 14
47 V.C. 9 251.............................................................................................................................
47 U. S c. 9 25 1 (b) ...................................................................................................................... 2, 3
47 V.C. 9 251(c) ......................................................................................................................, 3
47 U.C. 9 252.......................................................................................................20,
47 U.C. 9 252(a) ................................................................................................................ 2 , 3 , 19
47 U.C. 9 252(b) ........................................................................................................................ 19
47 U.C. 9 252(e) ........................................................................................................3, 19, 20, 21
47 U.C. 9 252(h) ..........................................................................................................................
47 U.C. 9 252(i).................................................................................................................
Idaho Code 9 7-901................................................................................................................ 11 , 14
Idaho Code 9 28-302 ................................................................................................... 6, 9
Idaho Code 9 61-601 .....................................................................................................................
Idaho Code 9 61-629.......................................................................................................................
Idaho Code 9 62-615(1) ..................................................................................................................
Other Authorities
In re Robert Ryder, et al.PUC Order No. 28427, 2000 WL 1055299 (Idaho PUC).....................
In the Matter of Star power Communications, LLC Petition for Preemption of Jurisdiction of the
Virginia State Corp. Commission 15 F .R. 11 (2000), 2000 WL 767701 (FCC) ........ 11 , 19
Rules
47 C. F . R. 9 51.3 .............................................................................................................................. 3
R. 35(b)(3) ................................................................................................................................
P. 1 (a) ..................................................................................................................................
P. l2(b)(6) and 56................................................................................................................
IDAP A 31.01.0 1
...........................................................................................................................
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I. STATEMENT OF THE CASE
Respondent on appeal, the Idaho Public Utilities Commission (Commission or PUC),
believes the Statement of the Case set forth in PageData s Brief is incomplete. Consequently,
pursuant to I.A.R. 35(b)(3), the Commission offers its own Statement of the Case.
A. Nature of the Case
This is an appeal from final Orders of the Commission.In the underlying
administrative proceeding the Petitioner, Joseph B. McNeal dba PageData (PageData), filed a
Complaint against Qwest Corporation. R. at p. 97.1 The Commission declined to resolve the
dispute and dismissed PageData s Complaint without prejudice finding that the parties must first
abide by the arbitration provision of their approved Interconnection Agreement. R. at p. 215;
PUC Order No. 29687. PageData s Petition for Reconsideration, alleging that the arbitration
clause was unconscionable, was denied. R. at p. 219-20; Order No. 29726.
B. Course of Proceedings
On October 31 2003, PageData filed a Complaint with the Commission alleging that
Qwest Corporation (Qwest) was not in compliance with the reciprocal compensation provisions
of their Interconnection Agreement. R. at p. 97-106. On November 26, 2003 , Qwest filed a
Limited Response to PageData s Complaint arguing that the Complaint should be dismissed
because the parties' Interconnection Agreement contains an arbitration clause. R. at p. 108-20.
PageData filed a Reply to Qwest's Limited Response. R. at p. 121-42. PageData also filed a
Request for Summary Judgment with the Commission on January 29, 2004. R. at p. 143-59.
Neither party requested oral argument or a hearing date. See R. at p. 173.
Because the Record in this matter consists of only one volume, citation to the Record in the PUC's Brief has been
abbreviated to omit the continued repetition of "Vol. I."
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The parties then undertook a lengthy period of settlement negotiations regarding this
and other pending matters. The settlement negotiations were ultimately unsuccessful. See R. at
p. 181.
On January 19, 2005 , the Commission issued Order No. 29687 declining to resolve
the dispute and dismissing the Complaint without prejudice. R. at p. 210-16 (Appendix A).2 The
Commission found that it was appropriate to dismiss the Complaint without prejudice given the
presence of a detailed arbitration clause in the parties ' Interconnection Agreement. R. at p. 214-
15 (Appendix A). PageData filed a Petition for Reconsideration, R. at p. 217, which was denied
in Order No. 29726 issued March 9, 2005. R. at p. 224-29 (Appendix B).
On April 19 , 2005, PageData filed a Notice of Appeal from Commission Order Nos.
29687 and 29726. R. at p. 230. Following a dispute about the contents of the appellate Record,
the Commission issued Order No. 29800 settling the Record on June 14, 2005. R. at p. 239.
C. Statement of Facts
Interconnection Agreements In an effort to promote competition in the
telecommunications industry, the federal Telecommunications Act of 1996 (the Act) requires
incumbent local exchange carriers (ILECs) such as Qwest to interconnect their facilities with
other telecommunications carriers requesting access to markets, such as PageData. 47 U.C. 9
251 (c )(2). The carriers may negotiate and enter into binding interconnection agreements that
specify the details and charges for the interconnection of their systems. 47 U .c. 9 252(a)(1).
Among other things, the Act mandates that when carriers interconnect their networks, they have
a "duty to establish reciprocal compensation arrangements" for transporting and terminating the
calls of each other s customers. 47 U.C. 9 25l(b)(5). A local exchange carrier must make
2 For the convenience of the Court, the PUC's final Order No. 29687 is included in Appendix A and the PUC'
reconsideration Order No. 29726 is contained in Appendix B.
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IDAHO PUBLIC UTILITIES COMMISSION
available any approved interconnection agreement to which it is a party to any other requesting
telecommunications carrier upon the same terms and conditions as those provided for in the
approved agreement. 47 U.C. 9252(i).
All interconnection agreements must be submitted to the state regulatory commission
(Le., the Idaho PUC) for approval. 47 U.C. 9 252(a)(I); 9 252(e)(1); Idaho Code 9 62-615(1).
However, the Commission s review of an interconnection agreement is severely limited. The
Commission may reject an agreement adopted by negotiation only if it finds that the agreement
discriminates against a telecommunications carrier not party to the agreement, or that
implementation of the agreement is not consistent with the public interest convenience and
necessity. 47 U.C. 9 252(e)(2)(A). Additionally, the Idaho PUC , as well as the Federal
Communications Commission (FCC), has acknowledged that carriers voluntarily entering into
interconnection agreements "may negotiate terms, prices and conditions that do not comply with
either the FCC rules or with the provision of Section 251 (b) or ( c).In re Robert Ryder, et al.
PUC Order No. 28427 at 11 (emphasis in original), 2000 WL 1055299 (Idaho PUC); 47 C.R. 9
51.3 ("a state commission shall have authority to approve an interconnection agreement adopted
by negotiation even if the tenns of the agreement do not comply with the requirements of this
part"
).
Once approved, all interconnection agreements are posted by the Commission. 47 U.
9 252(h).
The underlying Interconnection Agreement in this proceeding was adopted by Qwest
and PageData through voluntary negotiations. R. at p. 70. They agreed to adopt a previously
approved and amended Qwest/Arch Paging Interconnection Agreement pursuant to 47 U.C. 9
252(i). R. at p. 73. Mr. McNeal signed the Agreement to adopt the Qwest/Arch Interconnection
Agreement on December 22, 2002.R. at p. 74.The Qwest/PageData Interconnection
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IDAHO PUBLIC UTILITIES COMMISSION
Agreement was approved by the Commission on February 25, 2003. R. at p. 75, 77. The parties
subsequently submitted an amendment to this agreement (R. at p. 81-89), which was approved
by the Commission on July 15 , 2003. R. at p. 91-96. Mr. McNeal signed and accepted the
amendment on May 19, 2003. R. at p. 86. Neither of the approved amendments to the
Interconnection Agreement affected the arbitration clause at issue here.The subject
Interconnection Agreement was first approved in Case No. USW - T -00-20. R. at p. 6-52.
The parties' Interconnection Agreement contains a mandatory arbitration provision in
Section 13.14. This section states 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 U.C. Secs. 1-16. not state law. shall govern 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. The prevailing 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 be construed to waive or limit
either Party s right to seek relief from the (Idaho) Commission or the FCC as
provided by state or federal law.
R. at p. 34, 225 (Appendix A)( emphasis added).
2. PageData s Complaint and the PUC Orders On October 31 , 2003, PageData filed
a Complaint with the Commission alleging that Qwest was not in compliance with the reciprocal
compensation provisions of their Interconnection Agreement. R. at p. 97-106. Qwest filed a
Limited Response asking that the Complaint be dismissed because Section 13.14 of the parties
Interconnection Agreement contains detailed procedures for resolving disputes, including an
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IDAHO PUBLIC UTILITIES COMMISSION
arbitration clause.R. at p. 108-20.Qwest argued that the Commission should not exert
jurisdiction over this private contract dispute, citing authority that the Commission is not the
proper forum for arbitration or mediation of disputed contracts. R. at p. 115. Qwest also
maintained there is no federal or state law that clearly grants the Commission jurisdiction over
disputes arising from a previously approved interconnection agreement. R. at p. 116. Qwest
next argued that the FCC has recognized that a state commission may have no responsibility to
hear and decide an interconnection agreement dispute where the agreement contains a dispute
resolution mechanism. R. at p. 117. Finally, Qwest asserted that dismissal of PageData s filing
is supported by the strong public policy favoring arbitration and alternative dispute resolution.
R. at p. 117-18. Qwest did not address the substantive allegations of the Complaint, but argued
the dispute should be resolved through arbitration. R. at p. 108-18.
On January 19, 2005, the Commission issued Order No. 29687 declining to accept
jurisdiction to hear the Complaint regarding reciprocal compensation and dismissing PageData
Complaint without prejudice. R. at p. 214-15 (Appendix A). After reviewing Section 13.14 of
the Interconnection Agreement, the Commission found that: "the parties clearly contemplated
utilizing arbitration when they cannot resolve their dispute informally.R. at p. 215. The
Commission observed that the Idaho Supreme Court "has recognized that there is a strong public
policy in favor of arbitration and that arbitration is a favored remedy for resolving disputes.Id.
The Commission concluded that although the arbitration clause "does not limit the parties right
to seek relief from this Commission, the arbitration process is the first and foremost method for
resolving disputes under the Interconnection Agreement." Id.
On February 9, 2005, PageData filed a Petition for Reconsideration asserting for the
first time that the arbitration clause was unconscionable. R. at p. 217. PageData requested the
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Commission schedule a hearing pursuant to Idaho Code 9 28-302 so PageData could present
additional evidence regarding unconscionability. 3 R. at p. 219. PageData also argued there is no
mechanism allowing an arbitrator decision to be incorporated into an interconnection
agreement and made available to other carriers under 47 U.C. 9252(i). R. at p. 218.
On March 9 , 2005, the Commission issued Order No. 29726 denying PageData
Petition for Reconsideration and affirming its decision to dismiss without prejudice for several
reasons. R. at p. 229 (Appendix B). First, the Commission found that Idaho Code 9 28-302
confers jurisdiction upon the court, not the Commission. R. at p. 226-27 (Appendix B). Thus,
the Commission was not the appropriate forum to decide whether the arbitration clause was
unconscionable. Id. Second under the controlling opinions of this Court, the Commission
observed that the construction and enforcement of contracts is generally a matter which lies in
the jurisdiction of the courts and not the Public Utilities Commission. R. at p. 227 (Appendix B).
Third, the Commission observed that "for an arbitration provision to be voided
unconscionable, it must be both procedurally and substantively unconscionable.Id.The
Commission ultimately found that, although there is no dispute concerning the Commission
authority to approve interconnection agreements under the Act, it would decline to subsequently
engage in interpretation and enforcement of this particular agreement that contains an arbitration
clause. R. at p. 228-29 (Appendix B).
The Commission also found PageData s argument, that there is no mechanism in
Idaho statute to file a private AAA arbitration decision with the Commission and make it
publicly available to other carriers for adoption under 47 U.C. 9 252(i), was not persuasive. R.
at p. 228 (Appendix B). The Commission stated it was not aware of any impediment that would
Idaho Code 9 28-302(1) provides in pertinent part that "If the court as a matter of law 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. . ." (emphasis added).
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IDAHO PUBLIC UTILITIES COMMISSION
prevent either party to the arbitration from filing an arbitration decision as an amendment or
clarification to their interconnection agreement, and that other jurisdictions have found that both
parties to the agreement bear responsibility for filing it with the state commissions. Id. Lastly,
the Commission pointed out that, as referenced in its initial Order No. 29687 , there is a strong
public policy in favor of arbitration and arbitration clauses, and the parties here had voluntarily
negotiated the adoption of the Arch Interconnection Agreement in its entirety which includes the
provision for arbitration. Id.
On April 19, 2005 , PageData filed a Notice of Appeal from the Commission s Order
No. 29687 and No. 29726. R. at p. 230. The Commission subsequently issued Order No. 29800
settling the Record on Appeal, resolving the parties' dispute concerning the Record. R. at p. 239.
II. ADDITIONAL ISSUES PRESENTED ON APPEAL
While the Commission does not have any additional issues to present on appeal, the
five issues cited by PageData can be more succinctly stated as follows:
1. The Commission did not err when it declined jurisdiction and dismissed
PageData s Complaint without prejudice because the parties were
required to utilize the arbitration provision of their Interconnection
Agreement.
2. The Commission did not err when it found that the issue of
unconscionability and contract interpretation is best left for the courts.
3. The Idaho Rules of Civil Procedure do not apply to the Commission.
PageData is not pennitted to raise issues for the first time on
appeal.
The Rules of Civil Procedure do not apply to the Commission.
4. PageData has misinterpreted Section 252 of the federal Telecom Act.
Nothing in Section 252 gives the Commission "exclusive rights
to resolve disputes under approved interconnection agreements.
There is no statutory impediment to filing an arbitration decision
with the Commission.
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The Commission does not seek attorney fees on appeal.
III. ARGUMENT
A. Summary of Argument
This appeal presents the straightforward issue of whether the Commission properly
exercised its discretion by declining jurisdiction and dismissing PageData s Complaint without
prejudice. It did. According to the plain language of the parties' voluntarily negotiated and
approved Interconnection Agreement, they are required to arbitrate disputes that they cannot
resolve informally. While the dispute resolution clause states that it does not limit the parties
right to seek relief from the Commission, the Commission found that "arbitration remains the
first and foremost method of resolving disputes under the interconnection agreement." R. at p.
215 (Appendix A).
This Court recognizes a strong public policy in favor of arbitration, and has held that
arbitration is a favored remedy for resolving disputes. The Telecommunications Act and FCC
decisions acknowledge that parties may be bound by dispute resolution clauses in their
interconnection agreements to seek relief in a particular fashion, such as arbitration.
Consequently, a state commission may have no responsibility in the first instance to interpret and
enforce provisions of approved interconnection agreements.
The Commission also relied on opinions of this Court that limit the Commission
authority to interpret and enforce contracts. Typically "the construction and enforcement of
contracts is generally a matter which lies in the jurisdiction of the courts and not the public
utilities commission." R. at p. 227 (Appendix B) (citing cases).
PageData has not demonstrated that the arbitration clause is procedurally or
substantively unconscionable, or that it is unenforceable. Additionally, PageData has not alleged
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IDAHO PUBLIC UTILITIES COMMISSION
a valid contractual defense to the underlying Interconnection Agreement that would allow it to
avoid arbitration by litigating the validity of the entire Agreement itself. The unconscionability
of a contract is a matter beyond the Commission s authority. Idaho Code 9 28-302; R. at p.
227 (Appendix B).
The Commission s findings are supported by substantial and competent evidence in
the Record. The Commission did not act contrary to law, nor abuse its discretion. The dismissal
of the Complaint without prejudice was a regular pursuit of the Commission s authority. The
Commission s Orders should be affirmed.
B. Standard of Review
The standards of review for Orders of the Public Utilities Commission are well
settled. Under the Idaho Constitution, this Court has only limited jurisdiction to review decisions
of the Commission. Idaho Const., Art. 5, 9 9; A. W Brown Company v. Idaho Power Company,
121 Idaho 812, 815, 828 P .2d 841 , 844 (1992). "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.Idaho Code 9 61-629.
With regard to findings of fact, if the Commission s findings are supported by
substantial, competent evidence this Court must affirm those findings Industrial Customers of
Idaho Power v. Idaho PUC 134 Idaho 285, 288, 1 P.3d 786,789 (2000), even if the Court would
have made a different choice had the matter been before it de novo. Hulet v. Idaho PUC, 138
Idaho 476 , 478 , 65 P.3d 498, 500 (2003). Substantial, competent evidence is defined as more
than a mere scintilla, but something less than the weight of the evidence. Industrial Customers,
134 Idaho at 292-93, 1 P.3d at 793-94.
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On questions of law, reVIew is limited to the determination of whether the
Commission has regularly pursued its authority. A. W Brown 121 Idaho at 815 828 P.2d at 844;
Hulet 138 Idaho at 478,65 P.3d at 500. The Commission s Order or ruling will not be set aside
unless it has failed to follow the law or has abused its discretion. Application of Boise Water
Corp.82 Idaho 81 , 86, 349 P .2d 711 , 713 (1960)( citing cases).
The Commission s Orders must contain the reasoning behind its conclusions to
sufficiently allow the reviewing court to determine that the Commission did not act arbitrarily.
Rosebud Enterprises v. Idaho PUC, 128 Idaho 609, 618 , 917 P.2d 766,775 (1996). "What is
essential are sufficient findings to permit the reviewing court to determine that the IPUC has not
acted arbitrarily.Id. at 624, 617 P .2d at 781 (citations omitted).
Contrary to PageData' s assertions (Brief at p. 6-7), the Orders of the Commission are
not subject to de novo review. PageData does not offer any authority for its position. Id.
Indeed, this Court will not displace the Commission s choice between two fairly conflicting
views, "even if the Court would have made a different choice had the matter been before it
novo." Boise Water Company v. Idaho PUC, 128 Idaho 534, 537, 916 P.2d 1259, 1262 (1996).
Matters may not be raised for the first time on appeal. Eagle Water Company
Idaho PUC 130 Idaho 314, 316-, 940 P.2d 1133,1135-36(1997). "It is a well settled rule
that in an appeal from the commission matters may not be raised for the first time on appeal and
that where the objections were not raised in the petition for rehearing, they will not be considered
by this court.Id. (quoting Key Transp., Inc. v. Trans Magic Airlines Corp.96 Idaho 110, 112-
113,524 P.2d 1338, 1340-41 (1974)).
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C. The Commission Did Not Err When It Declined Jurisdiction and Dismissed PageData
Complaint Without Prejudice Because the Parties Were Required to Utilize the Arbitration
Provisions of Their Interconnection Agreement.
In its Order No. 29687, the Commission found that the parties' Interconnection
Agreement contains an arbitration clause. R. at p. 214 (Appendix A). PageData acknowledges
that an arbitration provision is contained in Section 13.14 of the Agreement. R. at p. 97;
PageData s Brief at p. 10. The Commission also noted that this Court recognizes a strong public
policy in favor of arbitration, and has held that arbitration is a favored remedy for resolving
disputes. International Assoc. of Firefighters v. City of Boise 136 Idaho 162, 168,30 P.3d 940
946 (2001). R. at p. 215 (Appendix A).
Both the Idaho State Legislature as well as the U.S. Congress in their enactment of
the Uniform Arbitration Act and the Federal Arbitration Act, respectively, have embraced
arbitration as a favored remedy. Under both federal and state law, arbitration agreements are
valid, enforceable and irrevocable, except upon such grounds as exist at law or in equity for the
revocation of any contract. Idaho Code 9 7-901; 9 U.C. 9 2. Here, Section 13.14 states that
the "Federal Arbitration Act, 9 U.C. Secs. 1-, not state law shall govern the arbitratability of
all Disputes " R. at p. 34, 211 (Appendix A)(emphasis added).
Additionally, the FCC has specifically recognized the validity of dispute resolution
provisions contained in interconnection agreements entered into pursuant to the federal
Telecommunications Act of 1996, 47 U.C. 9 251 et seq.In the Matter of Starpower
Communications, LLC Petition for Preemption of Jurisdiction of the Virginia State Corp.
Commission CC Docket No. 00-, FCC 00-, 15 F .R. 11 277 at n.14 (2000), 2000 WL
767701 (FCC). The FCC noted
, "
parties may be bound by dispute resolution clauses in their
interconnection agreement to seek relief in a particular fashion, and therefore, the state
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IDAHO PUBLIC UTILITIES COMMISSION
commission would have no responsibility under section 252 to interpret and enforce an existing
agreement." Id. This is the situation in this case, as Section 13.14 of the parties ' Agreement
contains a mandatory arbitration clause. R. at p. 34.
The plain language of the arbitration clause in the parties Interconnection
Agreement requires them to arbitrate any dispute that cannot be resolved through negotiations.
Section 13.14 states any dispute that "If any claim cannot be settled through negotiations, it shall
resolved by arbitration." R. at p. 34, 211 (Appendix A)(emphasis added). When the language
of a contract is clear and unambiguous, its interpretation and legal effect are questions of law.
Shawver v. Huckleberry Estates, LL.C.140 Idaho 354 361 93 P.3d 685 692 (2004); McKay
Boise Project Board of Control 141 Idaho 463, 111 P.3d 148 , 156 (2005). An unambiguous
contract will be given its plain meaning. Id. A contract is ambiguous if the Court determines
that it is "reasonably subject to conflicting interpretation.McKay, 141 Idaho at 463, III P.3d at
156.
PageData asserts that the last sentence in Section 13.14 allows it to choose
arbitration, the Commission, or the FCC in lieu of federal or state court, and that "Qwest is
contractually bound to accept PageData selected method of relief without recourse.
PageData s Brief at 13. The last sentence reads: "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
state or federal law.R. at p. 34. However, the Commission found "the parties clearly
contemplated utilizing arbitration when they cannot resolve their dispute informally," and that
the plain language, "shall arbitrate " requires them to first utilize the arbitration process detailed
in their agreement. R. at p. 214-15 (Appendix A). The Commission stated
, "
Although Section
13.14 does not limit the parties right to seek relief from this Commission, the arbitration process
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IDAHO PUBLIC UTILITIES COMMISSION
is the first and foremost method for resolving disputes under the Interconnection Agreement." R.
at p. 215 (Appendix A).
The Commission recognized and found that the enforcement of contracts is generally
a matter which lies in the jurisdiction of the courts and not the public utilities commission. R. at
p. 227 (Appendix B). 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). This Court recognizes exceptions to this general rule which include
instances where both parties agree to let the Commission settle the contractual dispute, and
where "the Commission can use its expertise to supply a reasonable contract rate where the
parties have an existing contract but are unable to agree to the specific rate.Afton Energy
Idaho Power Co.III Idaho 925 , 929 729 P.2d 400, 404 (1986). The Commission found
neither exception applies in this case. R. at p. 227 (Appendix B). The Commission found that
because Qwest objected to the Commission s involvement and urged the Commission to decline
to exercise jurisdiction, obviously, the parties did not agree to allow the Commission to resolve
their contractual dispute. Id.
The language of Section 13.14 is clear and unambiguous. The section, read as a
whole, is subject to only one reasonable interpretation. If it is interpreted as PageData has put
forth, then the provision regarding mandatory arbitration essentially has no meaning. If the
parties' Agreement was, as PageData suggests, that they could choose a forum - either
arbitration, the state commission, or the FCC - then that is what it would have said. It did not.
PageData interpretation is not reasonable.Section 13.14 clearly states, "If any claim
controversy or dispute between the Parties. . . cannot be settled through negotiation, it shall
resolved by arbitration.R. at p. 34 (emphasis added). The plain language of the arbitration
RESPONDENT BRIEF OF THE
IDAHO PUBLIC UTILITIES COMMISSION
clause requires the parties to arbitrate their dispute. The subject matter of PageD at a s Complaint
reciprocal compensation, is clearly an issue contained in and addressed by the Interconnection
Agreement. The strong public policy, as expressed by the Courts and the Legislatures, in favor
of arbitration supports the Commission s findings that the parties must first arbitrate their
dispute.Declining to resolve this dispute and dismissing PageData s Complaint without
prejudice was a proper exercise of the Commission s discretion, and a regular pursuit of its
authority. The Commission articulated the reasons for its actions, has followed the law, and has
not acted arbitrarily. Rosebud 128 Idaho at 618 917 P.2d at 775.The Commission s Order
should be affirmed.
D. The Commission Did Not Err When It Found that the Issue of Unconscionability and
Contract Interpretation is Best Left for the Courts.
An arbitration clause may be avoided or invalidated if it is shown to be
unconscionable. Both the Idaho Uniform Arbitration Act Idaho Code 9 7-901 et seq.and the
Federal Arbitration Act, 9 U.C. 9 et seq.provides that arbitration agreements are valid
enforceable and irrevocable, except upon such grounds as exist at law or in equity for the
revocation of any contract. Consequently, because unconscionability can be grounds for voiding
a contract, it can be a basis to revoke or invalidate an agreement to arbitrate. Lovey v. Regence
Blueshield of Idaho 139 Idaho 37, 41 , 72 P.3d 877 881 (2003). The Commission found that for
an arbitration provision to be voided as unconscionable
, "
it must be both procedurally and
substantively unconscionable.R. at p. 227 (Appendix B) quoting Lovey, 139 Idaho at 42, 72
P.3d at 882. "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. Additionally, the PUC noted this Court recognizes that,
independent of the concept of unconscionability, an agreement to arbitrate may be unenforceable
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IDAHO PUBLIC UTILITIES COMMISSION
if large arbitration costs preclude a party from effectively pursuing their claim. R. at p. 227
(Appendix B) citing Murphy v. Mid-West National Life Ins. Co.139 Idaho 330, 332, 78 P.
766, 768 (2003).
In its Petition for Reconsideration from the PUC's first Order No. 29687, PageData
for the first time argued that the "arbitration clause is unconscionable" and requested a hearing
pursuant to Idaho Code 9 28-302 to present evidence that the arbitration clause is
unconscionable.R. at p. 217, 221. The Commission found this "argument unavailing for
several reasons." R. at p. 226 (Appendix B).
First, the Commission found Idaho Code 9 28-302 confers jurisdiction on the
courts, not the Commission. R. at p. 226-27 (Appendix B). The Commission stated, Section 28-
302 is part of the Idaho Uniform Commercial Code - Sales
. .
. (and) provides in pertinent
part:
(1) If the court as a matter of law 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.
R. at p. 226-27 (Appendix B); Idaho Code 28-302 (emphasis added).
Idaho Code 9 28-302 only references the court, and grants no authority to the
Commission. The Commission is an agency of the legislative branch of government and may
only exercise those powers delegated to it by the Legislature. A. W Brown 121 Idaho at 819
4 PageData does not challenge the underlying contract, the Interconnection Agreement itself, as unconscionable or
void. See, R. p. 217-22; PageData s Brief at p. 15-16. Instead, PageData argues, both at the Commission and on
appeal, that the Commission s ruling makes the arbitration clause unconscionable. R. at p. 217, 220; PageData
Brief at p. 15.
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IDAHO PUBLIC UTILITIES COMMISSION
828 P.2d at 848; Industrial Customers 134 Idaho at 289, 1 P.3d at 790. The Commission is not
a court of law. Natatorium Company v. Erb, 34 Idaho 209, 200 P. 348 (1921). Therefore Idaho
Code 9 28-302 does not apply in this case and the appropriate forum to decide
unconscionability is a court of competent jurisdiction.
Second, as the Commission recognized, interpretation and enforcement of contracts
is generally a "matter which lies in the jurisdiction of the courts and not the public utilities
commission." R. at p. 227 (Appendix B) quoting Lemhi Telephone Company v. Mountain States
Tel. Tel. Company, 98 Idaho 692 , 696, 571 P.2d 753 , 757 (1977). See also Idaho Power
Company v. Cogeneration 134 Idaho 738, 9 P.3d 1204 (2000). When recently examining the
scope of the Federal Arbitration Act, the United States Supreme Court recognized that there are
limited circumstances when courts may decide "gateway matters.Green Tree Financial Corp.
v. Bazzle 539 U.S. 444, 452, 123 S.Ct. 2402, 2407 (2003). Such gateway matters include
whether the parties have a valid arbitration agreement at all. .
. .
Id. Thus, the decision of
whether the parties must resort to arbitration or whether the arbitration clause is unconscionable
are both questions for the courts to decide.
Third, PageData also suggested that the arbitration clause may be "struck down" on
the grounds that the arbitration fees are prohibitive. R. at p. 220. However, the Commission
found the arbitration clause in Section 13.14 is not unenforceable due to prohibitive costs. R. at
p. 227-28 (Appendix B). The Commission distinguished the arbitration clause in this case from
that which was found to be unenforceable as prohibitively expensive in Murphy. R. at p. 228
(Appendix B).The Commission found that Section 13.14 of the parties' Interconnection
Agreement provides for a single arbitrator and states that the prevailing party shall be entitled
an award of reasonable attorney fees and costs. Id. In contrast, the arbitration clause in Murphy
RESPONDENT BRIEF OF THE
IDAHO PUBLIC UTILITIES COMMISSION
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 (Murphy) 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.Id. Finally, the arbitration clause in Jv/urphy
was applicable only to claims of $10 000 or less. 139 Idaho at 332, 78 P .3d at 768. There is no
such limitation in Section 13.14 of the Interconnection Agreement. PageData s suggestion that
arbitration is cost-prohibitive is not supported by the evidence in the record. As the Commission
concluded, the arbitration clause in Section 13.14 "stands in stark contrast to the arbitration
provision in Murphy.R. at p. 228 (Appendix B).The Commission properly rejected
PageData s argument that the arbitration clause was unconscionable and unenforceable. The
Commission articulated the reasons for its actions, has followed the law, and has not acted
arbitrarily. Rosebud 128 Idaho at 618, 917 P.2d at 775. The Commission s Orders should be
affirmed.
E. The Idaho Rules of Civil Procedure Do Not Apply to the Commission.
PageData argues on appeal that
, "
Qwest sought and was granted an extraordinary
remedy from the IPUC without meeting its burden for a motion to dismiss, motion for summary
judgment, or judgment on the pleadings without any explanation from the IPUC." PageData
Brief at p. 10. PageData argues that the Commission should have addressed the standards set
forth in the Idaho Rules of Civil Procedure l2(b)(6) and 56. Id. at p. 7-10. This argument
without merit for two reasons. First, PageData may not raise this argument for the first time on
appeal.Second, the Idaho Rules of Civil Procedure do not apply to the Public Utilities
Commission.
RESPONDENT BRIEF OF THE
IDAHO PUBLIC UTILITIES COMMISSION
1. PageData May Not Raise Arguments for the First Time on Appeal.
It is a well settled rule that in an appeal from the commission matters may not be
raised for the first time on appeal and that where the objections were not raised in the petition for
rehearing, they will not be considered by this court.Eagle Water Company v. Idaho PUC, 130
Idaho 314, 316-, 940 P.2d 1133 , 1135-36 (1 997)(quoting Key Transp., Inc. v. Trans Magic
Airlines Corp., 96 Idaho 110 112-113 524 P.2d 1338, 1340-41 (1974)). PageData did not raise
the issue of the Idaho Rules of Civil Procedure in its Complaint, its numerous responses
including a "Request for Summary Judgment," or in its Petition for Reconsideration. In fact,
PageData did not have one single citation or reference in this Record to the Idaho Rules of Civil
Procedure prior to the filing of its Brief with this Court. Consequently, PageData is precluded
from raising this issue here for the first time on appeal.
2. The Idaho Rules of Civil Procedure Do Not Apply to the Commission.
Even if the issue regarding the applicability of the Idaho Rules of Civil Procedure
had been properly raised and preserved for appeal, the Rules apply to courts, and do not apply to
the Commission. The Idaho Public Utilities Law directs the Commission to promulgate rules of
practice and procedure. Idaho Code 9 61-601. "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. . . .Id. The Commission has adopted Rules of
Procedure pursuant to its statutory authority. IDAPA 31.01.01. The Idaho Rules of Civil
Procedure apply only to the courts. I.R.P. lea). The Commission is not a court of law.
Natatorium Company v. Erb, 34 Idaho 209, 200 P. 348 (1921). Therefore, the Idaho Rules of
Civil Procedure do not apply to proceedings before the Commission.
RESPONDENT BRIEF OF THE
IDAHO PUBLIC UTILITIES COMMISSION
F. PageData Has Misinterpreted Section 252 of the Federal Telecommunications Act.
1. Noting in 47 U.C. ~ 252 Gives the Commission "Exclusive Rights" to
ResolveDisputes Under AQProved Interconnection Agreements.
PageData argues in its Brief that Section 252 of the federal Telecommunications Act
gives the state commissions the exclusive right to make first instance determinations with
regard to interconnection disputes.PageData Brief at p. 11 (emphasis added); See also
PageData Brief at p. 13, 14. However, PageData does not cite any specific language to support
its characterization of Section 252. On the contrary, by its expressed terms, Section 252(a)(2)
only permits a state regulatory commission to assist the parties in mediating an initial
interconnection agreement, or to arbitrate any disputed issue in an initial interconnection
agreement. 47 U.C. 9 252(a)(2) and 252(b)(4)(C). Nowhere in Section 252 is there an explicit
grant of authority for a state commission to enforce and resolve disputes under existing
interconnection agreements.
The FCC recognizes that parties may be bound by dispute resolution clauses in their
interconnection agreements, and thus
, "
the State commission would have no responsibility under
Section 252 to interpret and enforce an existing (interconnection J agreement." In the Matter of
Starpower Communications, LLC Petition for Preemption of Jurisdiction of the Virginia State
Corporation Commission Pursuant to Section 252(E)(5) of the Telecommunications Act of 1996
CC Docket No. 00-, 15 FCC Rcd 11 277 at n.14 (2000) 2000 WL 767701 (FCC). This appeal
presents such a case because Section 13.14 of the Interconnection Agreement contains a
mandatory arbitration clause.
. .
Moreover, there is nothing in 47 U.C. 9 252 that compels the Commission to
resolve and enforce a dispute under an existing interconnection agreement. Section 252(e)(5)
recognizes that if a state commission fails to carry out its duties under Section 252, then the FCC
RESPONDENT BRIEF OF THE
IDAHO PUBLIC UTILITIES COMMISSION
shall assume the responsibilities of the State commission under this section with respect to the
proceeding or matter and act for the State commission.While some courts have recognized
state commissions may enforce interconnection agreements pursuant to Section 252, this Court
has held that interpretation of contracts is generally a matter for the Idaho courts and not this
Commission. R. at p. 227 (Appendix B); Lemhi Telephone 98 Idaho at 696, 571 P.2d at 757;
Bel/south Telecommunications, Inc. v. MCIMetro Access Transmission Svs., Inc., 317 F.3d 1270
1274 (11th Cir. 2003). The Commission did not reach this issue here, and neither this Court, the
9th Circuit Court of Appeals, nor the U.S. Supreme Court have directly addressed the issue of
state commission authority to enforce interconnection agreements. PageData s argument that the
Commission has exclusive authority to enforce the contract is incorrect and contrary to Section
252(e)(5).
2. There is No Statutory Impediment to Filing an Arbitration Decision with the
Commission.
PageData argued on reconsideration and on appeal that there is no mechanism in
Idaho statute to file a private arbitration decision with the Commission and make it publicly
available to other carriers for adoption under Section 252(i) of the Act. PageData s Brief at p.
11-12. This argument is without merit. As the Commission stated in its reconsideration Order
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." R. at p. 228
(Appendix B). The parties' Interconnection Agreement contains "Changes in Law " Section 1.1,
and "Amendment Section 13., provisions which specifically recognize changing and
amending the Interconnection Agreement. R. at p. 7, 37. Indeed, the parties in the past have
amended the underlying agreement by submitting an application for the Commission to approve
the change. R. at p. 82-96.
RESPONDENT BRIEF OF THE
IDAHO PUBLIC UTILITIES COMMISSION
The Commission noted that either party could file an arbitration decision with the
Commission. R. at p. 228 (Appendix B). The Commission acknowledged that the Washington
Commission has ruled that both parties to an agreement had a responsibility to file an agreement
or amendment with the Commission. Id.; 47 D.C. 9 252. There is nothing to prohibit the
prevailing party in an arbitration dispute from filing the arbitrator decision with the
Commission.Through this process the Commission could, and would, assure that the
obligations it has with regard to Sections 252( e) and 252(i) of the Act are met.
IV. CONCLUSION
The Commission in this case declined to resolve PageData s Complaint and
dismissed it without prejudice. The Commission found that the parties must first comply with
the mandatory arbitration clause of their voluntarily negotiated and approved Interconnection
Agreement. The Commission also found that issues of unconscionability are best directed to the
Courts and not the Commission. The Commission s action was consistent with the law, the state
and federal policy favoring arbitration, as well as the parties ' own agreement. The Commission
regularly pursued its authority, and its findings are based on substantial and competent evidence
in the record. Consequently, the Commission s Order Nos. 29687 and 29726 should be affirmed.
DATED at Boise, Idaho this 16th day of August 2005.
Donovan E. Walker
Donald L. Howell, II
Deputy Attorneys General
Attorneys for the
Idaho Public Utilities Commission
RESPONDENT BRIEF OF THE
IDAHO PUBLIC UTILITIES COMMISSION
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 16th DAY OF AUGUST 2005
SERVED THE FOREGOING RESPONDENT BRIEF OF THE IDAHO PUBLIC
UTILITIES COMMISSION, IN SUPREME COURT DOCKET NO. 31844, VIA U SMAIL
BY MAILING TWO COPIES THEREOF, POSTAGE PREPAID , TO:
JOSEPH McNEAL
dbaPAGEDATA
PO BOX 15509
BOISE ID 83715
WILLIAM J. BATT
BATT & FISHER LLP
5 TH FLOOR
101 S CAPITOL BLVD
PO BOX 1308
BOISE ID 83701
ADAM SHERR
QWEST COMMUNICATIONS, INC.
1600 7TH AVENUE, ROOM 3206
SEATTLE, WA 98191
~Ci5~
SECRETARY
I .
. l
. !
en
88;J "i:88:J 88.;--;--'i ...
Office of the Secretary
Service Date
January 19, 2005
BEFORE THE IDilliO PUBLIC UTILITIES COlVIlVIISSION
JOSEPH B.lYIcNEAL, DBA P,~GEDATA,
YS.
CASE NO. Q\VE-O3-
CO iVIP LAIN ANT,
Q\VEST CORPORATION, INC.ORDER NO. 29687
RESPONDENT.
On October 31 2003 , Joseph N1cNeal dba PageData filed a "formal" Complaint
against Qwest Corporation. PageData alleged that Qwest is not in compliance with the
reciprocal compensation provisions of their Interconnection Agreement. In November 2003
Qwest submitted a "limited" response to PageData s Complaint. Qwest urged the Commission
to refrain from opening a docket and suggested that PageData~s Complaint should be dismissed.
Qwest did not address the merits of PageData' s Complaint. In December 2003 PageData filed a
Reply to Qwest's limited ~esponse.
In January 2004 PageData filed a Request for Summary Judgment. On August 18,
2004, PageData filed a Supplemental Memorandum supporting its Complaint. Attempts by the
parties to settle this Complaint (and other cases) have been unsuccessful. For reasons set out in
greater detail belo'.,v, the Commission decline~ jurisdiction to resolve this Interconnection
Agreement dispute.
BACKGROUND
In Order No. 28499 issued September 1 , 2000, the Commission approved an
Interconnection Agreement bet\veen Qwest and Arch Paging. In January 2003 , the Qwest-Arch
Interconnection Agreement was amended and subsequently approved by the Commission in
Order No. 29178. In February 2003 Qwest and PageData jointly filed an Application requesting
that the Commission approve PageData s adoption of the Arch Interconnection Agreement (as
amended) under the federal Telecommunications Act of 1996 47 V.C. 9 252(i). .The joint
Application stated that the parties ' adoption of the A.rch Agreement "was reached through
voluntary negotiations." The Commission subsequently approv~d PageData s adoption of the
amended Arch Agreement. Order No. 29198 at 3 210
1\ n t:' 1') 11.. T f"\ ""I () J::: 0 "7
PAGEDATA'S COi\IPLAINT
In its Complaint, PageData alleged first that Q\vest has misbilled PageDataunderthe .. H
adopted .AJ-ch Agreement, and second that Qwest has refused to correct the billing. PageData
requested that the Commission direct Qwest to correct the billing on .A.ccount BA.l"120SR51.
0454-454. In addition, PageData sought an Order from this Commission to require Qwest to
remit, cash payments to PageData for reciprocal compensation or, at a minimum, to issue credits
for the reciprocal compensation to specific accounts designated by PageData.
Under the adopted Arch .A.greement PageData asserted it is "in a unique position
(because) Qwest owes PageData more money per month than PageData owes Qwest" as a result
of reciprocal compensation. Complaint at 2. PageData maintained Q\vest has refused to issue
cash payments for reciprocal compensation "'because of prior disputed accounts.Jd. at 3.
PageData alleged Q\vest's failure to make reciprocal compensation payments or provide credits
violates Section 12.3 of the parties ' Interconnection Agreement. Section 12.3 allows either party.
to dispute any portion of the monthly billing and both parties agree to expedite investigation
any dispute. This. section also provides that either party may withhold up to four months \vorth
of disputed charges not to exceed $100 000 in the aggregate.Jd.
PageData argued Qwest should not be allowed to violate the tenns of the approved
Interconnection Agreement by mixing current interconnection disputes with "past disputes that
are before authoritative bodies. that have jurisdiction to settle those disputes...." Complaint at 7.
PageData insisted the terms of its Intercormection .Agreement should control regardless of past
disputes with Qwest.
PageData stated it filed its formal complaint pursuant to the federal
Telecommunications A.ct of 1996 and Section 13.14 (Dispute Resolution) of its Interconnection
Agreement. Section 13.14 of the Intercormection Agreement addresses disputes. This section
provides in pertinent part:
If any claim, controversy or dispute between the Parties, their agents
employees, officers, directors, or affiliated agents C'Dispute cannot . be
settled throuQ:h ne2:otiation, it shall be resolved bv arbitration under the then
current rules of the American Arbitration Association ("A.A..
).
The
arbitration shall be conducted by a single neutral arbitrator familiar with the
I PageData ~d Qwest are opposing parties in Idaho Supreme Coun Appeal No. 29175. The appeal concerns billing
disputes that arose before the parties entered into their flfSt Interconnection Agreement.
211
telecommunications industry and engaged in the practice of law. ... The
Federal Arbitration Act, 9 U.C. Sees. 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 ~A..A. rules
shall apply and the rules used shall be those for the telecommunicacions
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 Partv s right
to seek relief from the (Idaho 1 Commission or the FCC as provided by state or
federal law.
i\.dopted Qwest-PageData Interconnection Agreement, 9 13.14 (emphasis added).
Q\VEST'S RESPONSE
In its "limited" response to PageData s Complaint, Qwest asserted the Commission
should decline to docket a complaint proceeding and "should dismiss PageData s Filing." Qwest
Response at 2. Qwest specifically stated that its limited response does not constitute an
Answer" under the Commission s procedural Rule 57, IDAPA 31.01.01.057. Qwest maintained
that the parties ' Interconnection Agreement sets out detailed procedures for resolving disputes
but PageData has entirely ignored that contractual obligation.Jd. at 2. Because the substance
of PageData' s Complaint is a contract dispute under their Interconnection Agreement Qwest
urged the Commission to decline jurisdiction and instead direct the parties to utilize the dispute
resolution provisions of their Agreement.
Qwest further asserted that the procedures for addressing PageData s Complaint are
addressed by Section 13.14 (set out above) of the parties . Interconnection Agreement. Given
that the subject matter of PageData s Complaint arises under their adopted and Commission-
approved Interconnection Agreement, Qwest insisted PageData is contractually bound to follow
the dispute resolution procedures called out in the Agreement.
Qwest next asserted there is no federal or state law clearly granting the Commission
jurisdiction over disputes arising from an Interconnection Agreement. The Company maintained
that generally the construction and enforcement of contract rights in Idaho is a matter that lies in
the jurisdiction of the courts and not this Commission. Bunker Hill Company v. rVashington
rVater Power Company, 101 Idaho 493 , 616 P.2d 272 (1980). Thus , Qwest questioned whether
the Commission is the proper forum to address PageData' s contract Complaint.
212
....-;....,....-:...,..,..:--..-. .-
Finally, Qwest asserted that Idaho law strongly favors the enforcement of contractual
arbitration clauses. As set out above, Section 13.14 provides that unresolved disputes between
the parries shall be reso 1 ved by arbitration. Q\vest noted arbi tration is a favored remedy for
disputes. International Assoc. of Firefighters, LocallVo. 672 v. City of Boise 136 Idaho 162
P.3d 940 (2001). For these reasons, Qwest urged the Commission to dismiss the complaint and
not initiate a complaint proceeding.
PAGEDATA'S REPLY
In its Reply, PageData urged the Commission to reject Qwest s assertion that the
Commission has no j llrisdiction over this complaint. The Pager insisted the Commission has
jurisdiction to resolve disputes concerning interconnection agreements.rviore specifically,
PageData asserted that Idaho Code 99 62-614 and 62-615( 1) provides the Commission with the
requisite statutory authority to investigate and resolve this dispute. PageData relied on the
Commission s Order No. 29219 in the ITA/Illuminet v. Qwest case (No. Q\VE-O2-11) for
support. In that case, the Commission noted that Idaho Code ~ 62-615( 1) gives the Commission
full power and authority to implement the federal telecommunications act of 1996." PageData
R~ply at 326 quoting Order No. 29219 at n.1. In addition, the Pager maintained that Idaho Code
~ 62-6142 provides broad authority to the Commission so that it may "resolve disputes between
incumbent telephone companies, like Qwest, and other telephone service providers.Id.
quoting Order No. 29219 at Consequently, PageData believes that the Commission has
jurisdiction to entertain PageData s Complaint.
PageData also asserted that the Commission His responsible for enforcing the pricing
schedules and reciprocal compensation tenns on interconnection agreements that (the
Commission) approved (Idaho Code ~ 62-614).PageData Reply at 9. PageData insisted the
Commission "is compelled by Idaho statute to investigate all commercially filed formal
complaints and enforce all provisions of interconnection agreements that are filed within the
state of Idaho....Jd.
Idaho Code ~ 62-614( 1) states:
If a telephone corpo"ration providing basic local exchange service which has exercised the election
provided in section 62-604(2)(a), Idaho Code, and any other telephone col-porarion subject to title
, Idaho Code, or any mutual, nonprofit or cooperative telephone corporation, are unable to agree
on any matter relating to telecommunication issues between such companies, then either telephone
corporation may apply to the commission for detenrunation of the matter.213
Pag~Data explained that Section 13.14 of the Interconnection A.greement provides for
three methods of dispute resolution. "Qwest has the ability to take PageData to arbitr~ttlon;fifea ._.
- _.- "---
comp laint at the (Idaho J Commission where the services are being provided; or file a complaint
at the FCC in order that Qwest may request an order to demand payment or disconnect services.
ld. at 16. Instead of pursuing one 0 f these three methods of dispute resolution Qwest took
unilateral action by \vithholding reciprocal compensation. Consequently, PageData stated that
Qwest's conduct leaves the decision on which dispute resolution alternative to utilize '"
PageData alone.Id. at 1. After PageData filed this complaint, Qwest should now be prohibited
from dictating a different course of dispute resolution. Id. at 19.
THE REQUEST FOR SUlVIl\L-\.RY JUDGNIENT
In January 2004 PageData filed a '"Request for Summary Judgment " In its Request
PageData stated that Qwest is correcting the disputed invoices in this matter but is '"still not
agreeing to remit payment for reciprocal compensation .due PageData.PageData Summary
Judgment at 2. PageData insisted that its entitlement to reciprocal compensati~n under the
Interconnection Agreement more than offsets the charges billed by Q\vest.
DISCUSSION .L\.~D FINDINGS
After having reviewed the pleadings in this case, we decline PageData ' s invitation to
resolve its Interconnection Agreement dispute with Qwest. It is undisputed that both Qwest and
PageData voluntarily agreed to adopt the Q\vest-Arch Paging Interconnection Agreement
pursuant to 47 V.C. ~ 252(i). Section 13.14 of the Interconnection Agreement contains an
arbitration provision for the resolution of disputes between the parties. The Commission
approved PageData s Interconnection Agreement with Qwest in Order No. 29198. A review of
the arbitration provision is instructive.
Section 13.14 provides that any dispute bet\veen parties shall be resolved by
arbitration." (Emphasis added.) This section states that the arbitration will be conducted under
the rules of the American A..rbitratio~ Association (.A~A..) and the arbitrator s decision Hshall be
final and binding." The parties also agreed to utilize all Hexpedited procedures prescribed by the
AAA. rules " and the prevailing party "shall be entitled to an award of reasonable attorneys ' fees
and cost" Simply put, the Interconnection Agreement contains detailed procedures for utilizing
the AAA arbitration rules to resolve disputes.
211
III ...881'-=.
Based upon our renew of Section 13., we find that the parties clearly
-...--.-.- ---...-.....-..-.-.----
contemplated utilizing arbitration when they canrlOt resolve their dispute informally.Our
Supreme Court has recognized that there is a strong public policy in favor of arbitr:J.tion and thar
arbitration ~~is a favored remedy" for resolving disputes. International Assoc. of Firefighters
Local 672 v. Cit.v of Boise 136 Idaho 162 , 168, 30 P.3d 940 946 (2001). The Supreme Court
recognizes that the:
essential nanlre of arbitration is that the parties, by consensual agreement
have decided to substitute the final and binding judgrnent of an impartial
entity conversant \-vith the (telecommunications andJ business world for the
judgment of the courts. They seek to avoid the cost, in borh time and money,
of fonnal judicial dispute resolution.
Driver v. SI Corporation 139 Idaho 413 416, 80 P.3d 1024 , 1027 (2003) quoting Hecla i'dining
Co. v. Bunker Hill Co.101 Idaho 557, 562, 617 P.2d 861 866 (1980). Here the parties agreed
to include an arbitration clause in their contract. .J\lthough section 13.14 does not limit the
parties right to seek relief from this Commission, the arbitration process is the first and foremost
method for resolving disputes under the Interconnection Agreement.
\Ve further fmd PageData s reliance on Idaho Code 9 62-614 is misplaced. This
statute authorizes the Commission to resolve disputes between a Title 61 local exchange
company (LEC) and a telephone corporation that has elected to remove its non-local services
from regulation under Title 61 (i., Q\vest). However, PageData is not a Title 61 LEC providing
local exchange service. Under Idaho law, telephone corporations providing radio pagIng
services .are exempt from any requirements of title 61 , or chapter 6 , title 62, Idaho Code.
Idaho Code 9 61-121. See also Idaho Code S9 62-603 (13) and (14).
Even though the Commission declines jurisdiction in this case PageData is not
without a remedy. As PageData recognized, it may submit this dispute to arbitration or the FCC
under Section 13.14. Consequently, we decline PageData s request to resolve its reciprocal
compensation complaint against Qwest.
ORDER
IT IS HEREBY ORDERED that the Commission declines to accept jurisdiction to
resolve PageData s Complaint regarding reciprocal compensation. Consequently, we dismiss
PageData s Complaint without prejudice.
215
,.....;II!IIIII!Il ....818;.ilia -.:!88;
THIS IS A FIN'AL ORDER. Any person interested in this Order (or in issuesJ"il"la.lly
_. . ..- .----..
decided by this Order) or in interlocutory Orders previously issued in this Case 1\0. QvVE- T -03-
25 may petition for reconsideration \vithin t\venty-one (21) days of the service date of this Order
with regard to any matter decided in this Order or in interlocutory Orders previously issued in
this Case No. Q\VE-03-25. \Vithin seven (7) days after any person has petitioned for
reconsideration, any other person may cross-petition for reconsideration. See Idaho Code ~ 61-
626.
DONE by Order of the Idaho Public lTtilities Commission at Boise, Idaho this 1""-
day of January 2005.
4'/
Iti-C/
, PRESIDENTPALTL KJELLA1~-
~~
rvL~SH.A. H. SNIITH COiVEvIISSIONER
ATTEST:
~lD
" D. Jewell
Cariunission Secretary
blslO:Q\VETO325
21G
. II . I
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Office of the Secretary
Service Date
March 9, 2005
BEFORE THE IDA.HO PUBLIC UTILITIES COlVIlVIISSION
JOSEPH B. McNE,, DBA PAGEDATA,
Ys.
CASE NO. Q\VE- T -03-25
COLVIPLA.INAl~T,
Q"VEST CORPOR.\TION, 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. On
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) 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. ~ageData
primarily asserts that the Commission erred in. declining to resolve the complaint because the
arbitration clause is unconscionable. After revie-wing 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 IntercoID1ection 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
;2 2l~
ORDER NO. 29726
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and rv(r. ~vrc~eal dba Pag~Data. The Commission approved the Qwest-PageData Interconrlection
Agreement in Order No. 29198 issued February 25 2003.
PacreData filed Its Con1p laint against Qwest pursuant the . fedefal-
Telecolnn1unications Act of 1996 (47 U.C. S 251 et seq.and Section 13.14 CDispute
Resolution ) of its Interconnection Agreement.
pertinent part:
COIl1p laint at Section 13.14 provides in
If any claim, controversy or dispute between the. Parties , their agents
en1ployees, officers , directors, or affiliated agents C""Dispute cannot be
settled throu2:h negotiation. it shall be resolved by arbitration under the then
CUITent rules of the .A..merican Arbitration Association i~A.
).
The
arbitration shall be co~ducted by a single neutral arbitrator familiar with the
telecommunications industry and engaged in the practice of law. ... The
Federal .A.rbitration Act, 9 D.C. Secs. 1~16 , 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 A.A.-A.. 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
bv the arbitrator. shall be entitled to an a\-\,'ard of reasonable attornevs ' fees
and costs. The arbitration shall occur at 'a mutually agreed upon location.
NothinQ 'in this Section shall be construed to waive or limit either Party s right
to seek relief from t~ Commission or as provided by state orfederal law.
9 13., Qwest-PageData Interconnection Agreement (emphasis added).
THE COlVI1'vnSSION'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
behveen 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 6i2 v. Cit)' of Boise 136 Idaho 162 , 30 P.3d 940
(2001). Although Section 13.14 does not limit the parties ' right to seek relief fron1 this
Commission or the Federal Comn1unications Con1mission (FCC), the Commission found the
ORDER NO. 29726
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presence of a detailed arbitration clause should be "the first and foren10st rnethod for resolving
disputes under the Interconnection Agreement.Id.
TfIE PETITION FOR RECONSIDERATION
PageData generally argues that the Commission elTed in dismissing its Complaint in
reliance upon the arbitration clause in Section 13.14. The Con1pany maintains the Con1mission ' s
reliance on the arbitration clause is n1isplaced for two r~asons. First PageData "claims the
arbitration clause is unconscionable" and requests that the Commission schedule a hearing
pursuant to Idaho Code 9 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" \vhether the arbitration clause is unconscionable.
Second, even if the Complaint is referred to arbitration, PageData insists that Section
252(i) of the federal TelecOlnmunications 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 a priv~te arbitration decision
available for adoption by other carriers.Jd. In addition, PageDatasuggests that the arbitration
decision must be approved by the CoTI'unisslon.
DISCUSSION AND FINDINGS
A. Uncol1scionability
PageData claims that the arbitration clause contained in its Interconnection
Agreement is unconscionable and requests that the Col11ffiission convene an evidentiary hearing
on that claim. The Company suggests that the arbitration fees imposed by the American
Arbitration Association s (A.A.A) commercial rules and the costs of arbitration ~e 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.
PageData s argument unavailing for several reasons.
We find
First PageData asserts that Idaho Code 9 28-302 requlres 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 thisCornn1ission.
Section 28-302 is part of the Idaho Uniform Con1mercial Code - Sales. Idaho Code ~ 28-
101. This section provides in pertinent part:
22(j
ORDER NO. 29726 "'I
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(1) If the court as a n1atter 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 OT 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 anv unconscionable result.
(2) When it is claimed or appears to the court that the contract or any
clause thereof n1ay 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 9 28-302 (emphasis added). As is evident from the plain text of this section
, .
argun1ents and evidence of unconscionability must be presented to a court - not the Commission.
As our Supren1e Court noted in IVatatorium 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 Ha n1atter which
lies in the jurisdiction of the courts and not the public utilities commission.Lemhi Telephone
Co. v. lvlduntain 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 g~neral 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 an
arbitration clause that required each party to pay its own costs is not unconscionable. Id. at 45
72 P.3d at 885.
OUf 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. lvlid- West National Life Insurance Co.139
I The other exceptions are not pertinent here.
227
ORDER NO. 29726
88l ~_..88i -=-
Idaho 330 332 78 P.3d 766, 768 (2003) quoting Lavey, 139 Idaho at 45 72 P.3d at 885. This
concept is independent frO111 the doctrine of unconscionability. In Afurphy, 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 agreen1ent
provided that attorney fees and expenses for witnesses rnust be borne by the party incurring
them. ivfurphy, 139 Idaho at 332 , 78 P.3d at 768. The arbi tration provision in lvfurphy 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 a\vard 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. \Ve 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) a private AAA arbitration decision" \vith the Commission and make it publicly available to
other carriers for adoption under Section 252(i). \Ve 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 amendn1ent or
clarification to their Interconnection Agreement.Indeed, the vVashington Utilities and
Transportation Commission recently ruled .that both parties to an interconnection agreement bear
responsibility for filing the initial agreement with state commissions. rVashington UTC
Advanced Telecom Group, et al.Order No. 7 at ~,! 3 21 (Docket No. UT-O33011 , June 2
2004)~ 2004 \VL 1597624 (Wash. UTC). The \Vashington Commission also noted that other
state con1ffiissions have recognized that both parties to an interconnection agreement are
responsible for filing the agreement with state commissions. Id. at ~ 23. \Vhile these decisions
deal prin1arily 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
favor of arbitration and arbitration clauses. Here the parties "voluntarily negotiated" the
adoption of the Arch Interconnection Agreement in its . entirety. vVhile there is no dispute
concernIng the Commission s authority to approve interconnection agreen1ents , \ve decline to
ORDER NO. 29726 22~
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subsequently engage in interpretation and enforcen1ent 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 RECONSIDERA.TION.!ill Y 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 9 61-627.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho this
day of~larch 2005.
MARSHA H. S~IITH, CONfMISSIONER
, CO~IMISSIONER
ATTEST:
i?:o--"'-b C~
(~~
rzu.s
Barbara Barrows
Assistant Com.m~ssion Secretary
blslO:QWETO325 dh2
ORDER NO. 29726 228