Pacific Bell Wireless (“Cingular”)

140 Cal. App. 4th 718, 2006 Cal. App. LEXIS 905 (June 20, 2006)

In a sweeping victory for the Commission’s enforcement program, the Court of Appeal (Fourth District, Division 3) affirmed the Commission’s imposition of a $12,000,000 fine (with an accompanying reparations order) on Cingular Wireless.  The Court’s decision resolved the then long standing question of whether the Commission was vested with the jurisdiction to directly impose a fine, answering that question the affirmative.  The Court’s analysis on the issue of fines relied on (1) Section 701, (2) deference to the Commission’s construction of statutes fixing its authority and (3) the legislative history of 1993 amendments to Section 2107 and 2104, specifically Committee reports indicating that the Commission had the jurisdiction to impose fines.  Moreover, the court found that imposition of a fine related to early termination fees (“ETFs”) was not preempted by federal law, nor did imposition of a fine for violations of Sections 451 and 2896 contravene Cingular’s due process rights.  The Court finessed the question of whether a fine could be imposed on the basis of Section 2896 alone (an issue arising from the fact that the statute does not fall into the portion of the Public Utilities Code for which fines may be imposed pursuant to Section 2107) by finding that Cingular could be fined for violating Section 451.  Cingular argued that the broadly stated requirements of Section 451 (“just and reasonable service” etc.) rendered the statute too vague to form the basis for the imposition of a fine.  The Court disagreed, concluding that “Cingular could reasonably discern from the Commission’s interpretations of Section 451 that its conduct in this instance would also violate that statute.”  The Court denied the Petition for Writ of Review, even though (1) it had already granted it and (2) denial of the writ was not an option available to the Court once it had heard the case.  Cingular ultimately sought review in the U.S. Supreme Court but reached a settlement with the Commission during the pendency of the Petition for Writ of Certiorari.  Whether the Court’s logic would extend to portions of the Code imposing fines on non-public utilities (entities not subject to Section 451), is open to question. Moreover, some questions remains with respect to  whether the Commission may impose a fine in a non-adjudicatory proceeding.

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