TRANSPORTATION COMMISSION In the Matter of Determining ) DOCKET NO. UT-971515 the Proper Classification of:) UNITED & INFORMED CITIZEN ) VOLUME II ADVOCATES NETWORK ) Pages 33-77 _____________________________) A hearing in the above matter was held on May 19, 1998, at 9:30 a.m., at 1300 Evergreen Park Drive Southwest, Olympia, Washington, before Administrative Law Judge MARJORIE SCHAER. The parties were present as follows: UNITED & INFORMED CITIZEN ADVOCATES NETWORK, by J. Byron Holcomb, Attorney at Law, P.O. Box 10069, Bainbridge Island, Washington, 98110. Barbara L. Spurbeck, CSR Court Reporter US WEST COMMUNICATIONS, INC., by Peter Butler, Attorney at Law, 1600 Seventh Avenue, Room 3206, Seattle, Washington 98121. GTE, by Timothy J. O'Connell, Attorney at Law, 1800 41st Street, Everett, Washington, 98201. THE COMMISSION, by Shannon E. Smith, Assistant Attorney General, 1400 South Evergreen Park Drive Southwest, Olympia, Washington 98504-0128. INDEX OF EXAMINATION WITNESS: PAGE: DAVID GRIFFITH Direct Examination by Ms. Smith 63 JOSEPH THAYER Direct Examination by Mr. Butler 68 TOMMY C. ROSE Direct Examination by Mr. O'Connell 73 JUDGE SCHAER: The hearing will come to order. This is a hearing in Docket Number UT-971515, which is a classification proceeding brought by the Washington Utilities and Transportation Commission against United & Informed Citizen Advocates Network to determine whether United & Informed Citizen Advocates Network is conducting business as a telecommunications company subject to the regulation of the Commission or has performed or is performing any act requiring registration or approval of the Commission without securing the registration or approval required for such operations by RCW 80.36.350. This is a hearing for cross-examination of testimony that was set by prehearing conference order in this proceeding. It's taking place on May 19th, 1998, in Olympia, Washington, before Administrative Law Judge Marjorie Schaer. We had a brief discussion off the record, and I indicated that we would take appearances and then we are going to deal with motions that are pending in this proceeding, beginning with the motion for a stay, followed by motions to compel, and then finally dealing with the motions that were filed by U&I CAN, along with their notice of how they were going to proceed in today's hearing. So let's start by taking appearances, beginning with the appearance of Respondent, United & Informed Citizen Network, please. MR. HOLCOMB: I'm Byron Holcomb, Attorney, and I'm appearing specially at this proceeding to test the jurisdiction of the Commission to act against U&I CAN and to object to any evidence being offered or admitted by the court pursuant to the want of jurisdiction that exists in this case. With me today is a third-year law student, soon to be lawyer, hopefully to pass the bar in a couple months, Michael Johnson. He assists me in many matters. JUDGE SCHAER: Thank you. And for the Commission Staff, please. MS. SMITH: Shannon Smith, Assistant Attorney General, 1400 South Evergreen Park Drive S.W., P.O. Box 40128, Olympia, Washington, 98504-0128, appearing for Commission Staff. JUDGE SCHAER: Thank you. And for US West, please. MR. BUTLER: Peter Butler, Senior Attorney, 1600 Seventh Avenue, Suite 3206, Seattle, Washington, 98101. JUDGE SCHAER: For GTE, please. MR. O'CONNELL: Thank you, Your Honor. Timothy J. O'Connell, Counsel, Region Operations, GTE, 1800 41st Street, Everett, Washington, 98201. JUDGE SCHAER: Okay. The next item we are going to take up is the motion for stay by U&I CAN. Mr. Holcomb, would you like to address that any further than what you've said in your written materials? MR. HOLCOMB: To my knowledge, that motion has not been acted on. Am I correct on that? JUDGE SCHAER: That's correct. I'm going to rule on it in just a few moments. MR. HOLCOMB: Okay. I have filed with the Administrative Law Judge here a notice of appeal of the order, which is attached to the notice. That was done yesterday. And we would renew the motion to stay these proceedings until this matter is finally decided. Raised and subsumed in this appeal are the issues of jurisdiction, which we would raise today on argument by motion before the Commission. JUDGE SCHAER: Okay. Mr. Holcomb, I want to let you know that your motion refers to some documents in a court proceeding that are still not a part of the file in this proceeding. I had sent you a letter informing you that they were not a part of the file, and they have not since been filed, to my knowledge. Do you want to make those part of -- do you want to provide those in support of your motion at this time? MR. HOLCOMB: Well, we take the position that Shannon Smith was properly served, as the person to be served under the statute. She received a copy of the petition for review, properly received it. She should have provided a copy to you as part of the records and proceedings of the Commission. She has not. I do not feel it's my responsibility to do that when she was served properly, so I'm not going to make it part of this proceeding. If she's chosen not to do so, then that's the Commission's responsibility, not mine. JUDGE SCHAER: Is there any response to the motion for a stay? Ms. Smith. MS. SMITH: There's no grounds for a stay of this matter. The papers referred to by Mr. Holcomb were papers that he was obligated to file with this agency and failed to do so. It was his failure to do so that caused the Superior Court to dismiss the petition for review that are the documents that he mentions. The Attorney General's office has no obligation to complete service when one party has failed to do that. And were these documents to be made a part of the record in this matter, if Mr. Holcomb wanted the Commission or the Administrative Law Judge to have those documents to consider in support of his motion, then it is U&I CAN's obligation to give those documents to the proper party. It is not the obligation of any other party in this case, including the Commission Staff. JUDGE SCHAER: Mr. O'Connell. MR. O'CONNELL: Thank you, Judge Schaer. Regardless of whether those documents have or have not been filed by U&I CAN, U&I CAN's adherence to a motion for a stay at this point in the proceedings is frivolous. The stay was based on the pendency of a petition for review in Superior Court. That petition has been dismissed. U&I CAN had almost one full month to bring the matter before the Court of Appeals if it chose to do so and seek a stay in the Court of Appeals if it chose to do so. It did not. The motion for a stay of this proceeding should be denied on its merits regardless of whether any supportive documents have been filed. JUDGE SCHAER: Mr. Butler. MR. BUTLER: Nothing further. JUDGE SCHAER: Mr. Holcomb. MR. HOLCOMB: Just a brief rebuttal. The service of process statute envisions that service will be made on both the Commission and upon the Attorney General of the State of Washington. In addition to Ms. Smith, the Attorney General was served one -- I believe it's Diane McDaniel was served -- she should have brought notice of this proceeding to your attention. Presumably, that's the reason they are served. And if she has not brought it to your attention, I feel no obligation to do so either. What this amounts to is a charade of trying to keep the proper parties, being the Commission, or to create grounds to object, and I think -- I hope this Commission would see through that and fully instruct Ms. Smith hereinafter, when she is served, to deliver copies of documents to you, at least bring them to your attention and not use that as a ruse to try to avoid responsibility of -- so the Commission can do its work here without creating snares and traps where none should exist in the first place. JUDGE SCHAER: Well, let me ask you, the grounds of your original motion were that there was a court proceeding that was going to take place. MR. HOLCOMB: Yes. JUDGE SCHAER: Did that court proceeding take place? MR. HOLCOMB: Attached to the notice of appeal that you have is the order of Judge Dubuque dismissing that petition. The appeal has been filed. That is a record of this case. This matter is still ongoing. As I say, the same issues are going to be raised on appeal that are raised before the Commission today. I think it would be appropriate for a court to rule on the Commission's jurisdiction before the Commission further acted. JUDGE SCHAER: Okay. Would you like this document, which you have provided to me, to be considered -- filed in this record and considered as part of this discussion on the motion? MR. HOLCOMB: That's correct. We would, please. JUDGE SCHAER: In looking at the order that was attached, which I was able to do because you were courteous enough to give me a copy of this before we started today, I note that one of the conclusions of law in the order is that even if the court had jurisdiction over the petition for review, the court should dismiss the petition for review and allow the UTC the opportunity to conclude the issues that are pending before it. That's in this order as conclusion of law number nine. Do you wish to speak to that at all in support of your motion? MR. HOLCOMB: Well, I did not have a chance even to review this order and I did not sign it at the time. I did not approve it. That conclusion, in retrospect, in light of this, is totally, completely wrong by the judge, and that's one of the reasons we're appealing. The courts have the authority to determine jurisdiction, there's no special expertise residing with the Commission for that purpose, and that the court should decide jurisdiction in this matter. JUDGE SCHAER: I'm going to deny the motion for a stay at this time. I believe that it is appropriate for the Commission to proceed to a final order in this matter, so that there is an appealable order by which U&I CAN may go to court if it needs to challenge any of the issues in this proceeding. It's my understanding, from both the statute governing classification proceedings and from the order of the Superior Court, which has been provided to me, that primary jurisdiction over an issue of whether or not a company needs to register with the Commission has been lodged by the legislature with the Commission and that the decision that we're being asked to make beyond that, of whether or not this company should register, is the fact-based inquiry that this proceeding is about. And until that determination can be made, based on the record, the Commission does not have a basis to say whether or not this company is required to register. So I will deny the motion for a stay and we will proceed with today's hearing. The next motion that we're going to take up is the motions by GTE and US West to compel information. Mr. O'Connell or Mr. Butler, which one of you would like to speak to that first? MR. O'CONNELL: I took the lead in drafting the motion, Your Honor. I will address it on behalf of both US West and GTE. Both companies served proper data requests on counsel for U&I CAN. In both cases, there have been no responses whatsoever, not objections, not answers. I think, prima facie, the motion should be granted. I will note, however, that we are at a hearing. Neither GTE nor US West seeks to delay this hearing any further. And therefore, we would request that the appropriate order, which should be issued granting our motion to compel, is one deferring the motion pending the order issued as a result of this hearing. If the order issued as a result of this hearing is a final order resolving this proceeding, the motion need not be taken up. If the order issued as a result of this hearing does not resolve this proceeding and, in fact, there is a requirement for follow-on proceedings, we would request that the order grant the motion and direct U&I CAN to respond to the proper data requests. JUDGE SCHAER: Do you have anything to add to that, Mr. Butler? MR. BUTLER: Just to clarify the record, Your Honor. US West served two sets of data requests on U&I CAN. The first set was in January and the second set was in March, and neither of those have been answered by U&I CAN. JUDGE SCHAER: Mr. Holcomb. MR. HOLCOMB: Well, since the Commission has no jurisdiction over U&I CAN for a variety of reasons, that there's no reason for us to comply with orders that are essentially private in nature and for the use of the members of U&I CAN only. JUDGE SCHAER: Any brief response? MR. O'CONNELL: Your Honor, the Commission's procedures are well-established. It's not denied that they made no answer to the discovery requests. They should be answered. It's for this Commission to determine whether U&I CAN should be registered. It is not for U&I CAN to make that determination, which they're attempting to do by flouting this Commission's rules. We would ask that you issue an order along the lines of what I addressed in my opening comments. JUDGE SCHAER: I'm going to grant the motions to compel. I'm going to defer action on those motions pending the order that is the outcome of this hearing. If that order should lead to follow-on proceedings to this proceeding today, tomorrow, then the motion to compel will be granted. And again, if you need to go to court to try to enforce that order, you'll have another opportunity for Mr. Holcomb to frame his jurisdictional arguments and for the other parties to respond. MR. O'CONNELL: Thank you, Your Honor. JUDGE SCHAER: And the next item that we're going to take up is the motion and notice filed by U&I CAN dated May 9th, 1998, received at the Commission on May 11th. And Mr. Holcomb, I can tell you at this point that, looking at your motion, the motion to stay the proceedings has been denied by my order a few moments ago. The Commission will not revisit its decisions on the motions that have already been ruled upon, the Commission -- I will not disqualify myself from hearing this proceeding, and I will not hear a motion to dismiss another proceeding in this proceeding, nor will I address a motion to suspend that proceeding here. I will continue to allow the intervention of GTE and US West. And if you would like, then, to address your motion regarding jurisdiction at this point, you may proceed. MR. HOLCOMB: I draw the Court's attention -- Commission's attention to the attachments to the motions that I've made, the articles of incorporation. First of all, certification of incorporation, the articles of incorporation, and finally the by-laws. This Court or this Commission has before it all it needs to dismiss this action based on what's here. These documents clearly show that U&I CAN, which we'll use as the short way of describing the Respondents, a shorthand way of describing the responding party to this action, these documents clearly show that U&I CAN is a non-profit corporation. Number two, it does not conduct business. Number three, there is nothing in the by-laws or articles of incorporation that authorize it to sell, resell, or for use for hire any of its services to the general public, and is limited to members only. Number four, as you have found in 960659, that U&I CAN has no lines or line access of its own, in its own name. And finally, that the documents clearly indicate that U&I CAN exists for its members only. If the Commission will refer to my argument that is attached to the motions, there you will find that I want to talk about Washington State Constitution Article 12, Section 19, where it says -- uses the phrase "organized for the purpose." And that is what gives the Commission jurisdiction over transportation companies and telecommunications companies. And further, where they have lines, in this case, telephone lines and telegraph lines in their own names and so forth, you have found that they do not in the companion proceeding. They are clearly, for the five reasons I've indicated to you, not organized for the purpose of being a telecommunications company and thereby, not subject to registration by the WUTC. To order U&I CAN to register as a telecommunications company or a telephone company would cause it to violate WITA versus Ratepayers Association, 75 Washington Appellate; In re Electric Lightwave, 123 Washington 2d 530; and as to the issue of its activities, you allegedly have found, in 960659, that it's clear from authority, Lauria and West Freedom, that any of this, quote, bridging, a term that's not defined in any rule or regulation of the WUTC, does not constitute a -- subject to a regulation by the Commission. Finally, that for this Commission to order the registration of U&I CAN as a telephone company would cause an ultra vires act to be committed, which is subject of being enjoined under RCW 24.03.040. That section clearly prohibits a non-profit corporation from doing acts beyond its powers. Those powers are as expressed in the by-laws and articles of incorporation, approved by the secretary of state in Olympia. It should be pointed out, too, that there is no tariff, regulation, nor statute that declare the call transfer service to the members only of a non-profit corporation is illegal or improper. And the vice of all this is that this is adjudicatory rule-making without public comment, or outside the scope of the Commission itself. And what is reprehensible here, and there's no other word to describe that, is how each act of the telephone companies, then the Commission, followed by Commission act, and followed by the telephone company uses each subsequent proceeding to justify something that occurred in the prior proceeding. And that should plainly not be allowed. And it's beyond the jurisdiction of this Commission to even consider it. These retroactive rules are patently unfair and should not be considered by the Commission at all. And I would otherwise rely on my memorandum that I've filed in support of this motion, jurisdiction in three parts. Thank you. JUDGE SCHAER: Thank you. Any response to the motion, Ms. Smith? MS. SMITH: Your Honor, Commission Staff filed a written response to U&I CAN's motions, and we would rely on our written response this morning. JUDGE SCHAER: Okay. Response from GTE? MR. O'CONNELL: Thank you, Your Honor. I will be brief. One thing Mr. Holcomb's motion does not make clear is the basis upon which he is proceeding, under 480.09.426. The Commission's rules have adopted, essentially, the rules of Superior Court for determinative motions. It's not clear whether Mr. Holcomb believes that this should be treated as a motion to dismiss, for which the well-established rules in the Superior Court, under 12(B)(6) of the Civil Rules is applicable, or whether he thinks this should be treated as a motion for summary determination for which the summary judgment rules would be appropriate. I think it's important to consider that, because it makes apparent that this motion is, in fact, frivolous. If this motion is to be analyzed under the standards applicable to a motion to dismiss, all the nonmoving parties need do is articulate a set of facts which would justify going forward with the proceeding. I think the record in this case clearly establishes those facts, much less articulates them. And having responded before you, that is fairly clear, has engaged in a series of surreptitious acts to circumvent a rate mechanism that this Commission has established for many years. I think those set of facts are well articulated in the record, and I think they justify going forward and examining the issue of whether U&I CAN should be classified. If, alternatively, Mr. Holcomb believes that this motion should be treated as one for summary determination, handled under the summary judgment rules, I think the record that has been put into this case establishes a plethora of facts, curiously, that are not disputed, because U&I CAN has submitted no testimony. GTE, Commission Staff, and US West are not asking you to grant summary determination. We believe this hearing is appropriate. But there is no basis upon which you can conclude that there is no material fact in dispute justifying dismissal of this case. I think Commission Staff's papers respond more than adequately to Mr. Holcomb's legal arguments such as they are that either his bylaws or the prior ruling on their lack of standing or provisions of the Washington Constitution deprive this Commission of jurisdiction. I think Staff's brief addresses all of those quite well, and I won't reiterate those points, other than to say that the motion is without foundation. JUDGE SCHAER: Thank you. US West. MR. BUTLER: US West would join in the Commission Staff's response, and we would have two observations. First of all, consistent with Your Honor's earlier ruling on the motion stay, Your Honor has found the Commission does have primary jurisdiction to examine the question of whether U&I CAN is engaging in telecommunications services and is offering those, and it's appropriate for the Commission to have them register before the Commission. And the second observation that we would have goes more to the fact that U&I CAN, by submitting its articles of incorporation and also in several branches of the argument it presented today, seems to be offering evidence as to the ultimate issues in this case. That issue is whether U&I CAN is a telecommunications company, subject to regulation. And in light of that, it seems to me that, rather than this being framed as a motion to dismiss for lack of jurisdiction, it's more appropriately, as Mr. O'Connell reflected, a motion going to the ultimate facts in this case. And therefore, is either in the nature of a final argument or in the nature of a motion for summary determination, neither of which is appropriate at this point of the proceeding. MR. HOLCOMB: I'd like to respond by striking the representations of both Mr. O'Connell and Mr. Butler on the ground that they've not briefed this point, we've not had an opportunity to respond to it, not had an opportunity to review it. It's unfair to U&I CAN to allow them to even argue the point without briefing on it, and we move that they be stricken, their comments. MR. O'CONNELL: Absurd. JUDGE SCHAER: That motion's denied. Go ahead, please. MR. HOLCOMB: Pardon me? JUDGE SCHAER: That motion is denied. Go ahead with your response. MR. HOLCOMB: Lest I didn't emphasize it enough in terms of 3(A), is that this Judge in this Commission proceeding has previously held that line access is the determining factor in whether U&I CAN has standing. And we have cited two cases in the state of Washington, one in the Supreme Court, on the issue of standing, and that's jurisdictional, also. For this Commission to proceed with 971515, in the face of your own findings in 960659, defies logic and all that is known about standing, in terms of having jurisdiction over U&I CAN as a party. Also, I want to make sure that everybody understands here that this is a 14th Amendment question to the Constitution of the United States involved in this proceeding, where you are attempting to regulate private acts of persons and determine their rights. We want to make sure that that point is raised in this proceeding. In all likelihood, this case will end up in Federal Court at some point, and we want to make sure that the Commission is aware of the 14th Amendment arguments raised in the section 3(c) of our brief. Insofar as Mr. O'Connell's characterization of, quote, surreptitious, unquote, that was exactly the issue addressed in the Lauria and the West Freedom case, cited in support of argument 3(b) of jurisdiction. In there they found there was no bridging, though clearly not defined by the WUTC, but there was no bridging in that case. It involved resale. They don't say surreptitious use of anything here. And finally, I think -- I would hope that the Commission is aware that, in trying to beat on U&I CAN, that there's a much larger precedent at issue in this case, and that is the reach of these telephone companies to cellular phone services and e-mail provisions, which are definitely bridging operations, and the Commission should be very careful not to establish a precedence which opens up a whole new range of activities by the Commission to regulate those powers by the use of this case as a precedent. They should be very wary of that. Thank you. JUDGE SCHAER: Mr. Holcomb, did you want to have the articles and by-laws made a part of this record by attaching them to your motion? MR. HOLCOMB: I thought they had been a made a part of it, my jurisdictional fax in support of a motion. JUDGE SCHAER: Right. MR. HOLCOMB: If it requires extra identification for the record, yes, we want to make it part of the record, but they were attached and referred to in my motion. JUDGE SCHAER: I'm going to admit those into the record. I'd like to look first at the articles of incorporation and ask you if you have the information about the other records that would make this complete document? MR. HOLCOMB: About what records? JUDGE SCHAER: If you look at article five of the articles of incorporation, do you have that attached list available so that this could be -- MR. HOLCOMB: Board of directors? JUDGE SCHAER: -- so that this could be a complete document? MR. HOLCOMB: I can supply that. I do not have that right at hand. JUDGE SCHAER: Okay. Would you do so sometime this week, please? MR. HOLCOMB: I'm sorry? JUDGE SCHAER: Would you send that in sometime this week, please? MR. HOLCOMB: I will do so. Excuse me a second. My problem is I'm leaving town here Thursday to go back to Washington, D.C., and I'm asking Mr. Johnson if he can take care of that for me. Mr. Johnson can take care of that for me. JUDGE SCHAER: Thank you. I'm going to admit the articles of incorporation and by-laws as Exhibit 1. Is there any objection to having those included in the record? MS. SMITH: No. JUDGE SCHAER: Okay. So we have a complete record. You will send that in, then, as a late-filed portion of Exhibit 1. Would you so identify it in your cover letter, please? In looking at the by-laws, do you have any information about the meeting that was held when these were adopted or the date on which these were adopted or what process was gone through there? Usually, when I've seen by-laws, I've seen some indication of that information, as well. MR. HOLCOMB: What you see is what I have. It's the by-laws. JUDGE SCHAER: All right. Does U&I CAN keep a set of corporate minutes that would show when this was done, perhaps? MR. HOLCOMB: I honestly don't know. We can find that out and include those, if you'd like. JUDGE SCHAER: Would you check on that, and if you can get that information, either a notation from their corporate records or of their book of corporate minutes or some other thing, would you send that in, as well, as part of Exhibit 1? And if you can't locate that, would you so indicate in the cover letter, please? MR. BUTLER: Your Honor. JUDGE SCHAER: Yes. MR. BUTLER: For clarification, are you admitting as Exhibit 1 the articles of incorporation and the by-laws? JUDGE SCHAER: Yes. Mr. Holcomb, I'm going to deny your motion to dismiss for lack of jurisdiction. I'm going to note, first, that you have indicated that you're appearing specially today, but that U&I CAN entered a general appearance at the prehearing conference in this matter that took place on November 18th, 1997. But the real substantive basis for dismissing or denying the motion is that the purpose of a classification proceeding before the Commission is to determine the very question that you would seek to have us determine at the outset. It's to make a factual inquiry into what the company is doing and how, and to determine from those facts whether or not what the company is doing is providing telecommunications services, as defined in the statute. And until we have the factual record made on that, we will not have a basis to determine whether or not U&I CAN should register with the Commission. If there should be a factual determination that what U&I CAN is doing is provision of telecommunications services, then it may well be that U&I CAN is doing things that violate its bylaws and articles, but -- and then it might be that a member could bring an action to make the corporation stop doing those things. But what we have to do is start from the point of examining what is being done in light of the statutes governing telecommunications companies, and make that fact-based determination. And at that point, the Commission will determine whether it has authority to require U&I CAN to register as a telecommunications company or whether it does not have that authority. So I believe that the motion is premature. It would have us assume an answer to the inquiry we are making and assume that that answer is one that would say that your client does not need to register. And until we have gone through the hearing, addressed the testimony, determined the factual record, we will not have a foundation for making that decision. MR. HOLCOMB: Are you finding that U&I CAN is organized for the purpose of conducting business as a telephone company? JUDGE SCHAER: No, I'm not. MR. HOLCOMB: From the very basis of the documents you have before you, you can make that determination right now that they are not. We don't have to go into all of this, because on the basis of the documentation here, they are not. The members here, there will be no members challenging the acts of the corporation, because the corporation is doing exactly what it is empowered to do, to serve only its members. It is not serving the general public. You've got all the facts before you at t