New York Telephone Co. v. Public Service Commission

271 A.D.2d 35, 707 N.Y.S.2d 534
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMay 11, 2000
StatusPublished
Cited by7 cases

This text of 271 A.D.2d 35 (New York Telephone Co. v. Public Service Commission) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New York Telephone Co. v. Public Service Commission, 271 A.D.2d 35, 707 N.Y.S.2d 534 (N.Y. Ct. App. 2000).

Opinion

OPINION OF THE COURT

Per Curiam.

Petitioners commenced these CPLR article 78 proceedings challenging certain portions of an opinion and order by respondent Public Service Commission (hereinafter PSC) issued on May 29, 1997 (1997 Opns Pub Serv Commn No. 97-7 [hereinafter Opinion 97-7]). New York Telephone Company’s (hereinafter NYT)1 mass announcement service (hereinafter MAS) provides a system that enables telephone customers to hear [38]*38programming produced by various information providers (hereinafter IPs), such as sports scores and news reports, by dialing certain 976 numbers. Callers to these 976 numbers are assessed a fee by NYT, a portion of which is remitted to the IPs pursuant to PSC Tariff 900. Under this governing tariff, NYT was given the responsibility for keeping a count of the calls received by each IP, thereby providing a basis for NYT’s remittance to the respective IPs.

Until September 1990, NYT utilized an automated system called Autrax to tabulate the number of 976 calls received by each IP. Unfortunately, Autrax was prone to counting errors, and NYT was required to manually adjust call counts. To eliminate these counting errors, NYT transferred 976 calls from the Autrax system to the Ericsson system for the purpose of tabulating the number of calls received. That transfer, however, was attended by a variety of additional problems, resulting in IP complaints of decreased call volumes and lost revenues.

In 1993, the PSC initiated an omnibus proceeding to investigate various MAS-related issues. In the first phase, NYT and a group of IPs negotiated a settlement that was subsequently approved by the PSC (see, 34 PSC 905 [Opn No. 94-14]). The PSC thereafter initiated phase two of the proceeding to resolve the remaining issues and, after extensive hearings, an Administrative Law Judge (hereinafter ALJ) determined that (1) NYT had been guilty of willful misconduct regarding unauthorized adjustments to Autrax call totals and gross negligence relating to the transfer from Autrax to the Ericsson system, (2) petitioner Black Radio Network, Inc. (hereinafter BRN) was not entitled to compensation for the pretransfer adjustments, and (3) NYT must offer customers the option of blocking controversial 976 calls without blocking harmless 976 service. Moreover, the ALJ recommended that NYT pay the IPs refunds totaling $25.2 million. The PSC subsequently adopted the findings of the ALJ, with a few exceptions, the most notable being that the PSC refused to award the refunds recommended by the ALJ. Rather, concluding that the “refunds” were de facto damages which it lacked authority to award, the PSC determined that the courts should fashion the appropriate remedy.

Thereafter, NYT, BRN and petitioner Arthur Evans, individually and as a member of the Ad Hoc Committee of Independent Information Providers, initiated three separate CPLR article 78 proceedings challenging different facets of Opinion [39]*3997-7. Supreme Court subsequently consolidated the three proceedings and, in a comprehensive opinion, denied all three petitions in every respect. Petitioners appeal.2

NYT contends that the factual finding of gross negligence and willful misconduct was solely relevant to the issue of damages and, inasmuch as the PSC has no authority to award damages, it exceeded its authority in making the finding. We disagree. The PSC possesses supervisory power over all telephone companies, insuring that they comply with all provisions of the law (see, Public Service Law § 94 [2]). In furtherance of this legislative duty, the PSC possesses the authority “expressly delegated to it by the Legislature, or incidental to its expressed powers, together with those required by necessary implication to enable [it] to fulfill its statutory mandate” (Matter of Niagara Mohawk Power Corp. v Public Serv. Commn., 69 NY2d 365, 369; see, Public Service Law § 4 [1]). To determine whether the PSC exceeded this authority, our inquiry must focus upon “a realistic appraisal” of the matter under consideration (Matter of Consolidated Edison Co. v Public Serv. Commn., 47 NY2d 94, 102, revd on other grounds 447 US 530).

Here, PSC Tariff 900 provided exclusive control over every aspect of NYT’s conduct regarding the IPs (see, Lauer v New York Tel. Co., 231 AD2d 126, 129; Lee v Consolidated Edison Co., 98 Misc 2d 304, 305-306), and the PSC clearly possessed jurisdiction to enforce and interpret its terms (see, Matter of Black Radio Network v Public Serv. Commn., 253 AD2d 22, 25; Matter of Glens Falls Communication Corp. v New York State Pub. Serv. Commn., 239 AD2d 47, 50; Matter of AT&T Communications v Public Serv. Commn., 231 AD2d 155, 159, lv denied 91 NY2d 803). Moreover, the PSC was statutorily obligated to investigate IP complaints regarding alleged violations of the tariff (see, Public Service Law § 96 [3]; Meyerson v New York Tel. Co., 65 Misc 2d 693, 695).

It is noteworthy that PSC Tariff 900 immunized NYT from negligent behavior and expressly absolved it of liability in the absence of gross negligence or willful misconduct. In our view, it necessarily follows that the PSC, which was charged with interpreting and enforcing the tariff, was authorized to determine if NYT’s conduct rose to the level of culpability specified therein. Therefore, “a realistic appraisal” of the matter [40]*40compels the conclusion that the PSC was empowered to issue a factual determination resulting from its investigation of alleged impropriety by a utility that it was entrusted to regulate. We simply cannot envision a legislative scheme that would empower an administrative agency to investigate a matter, yet would preclude it from issuing findings of fact regarding an issue inherent therein, i.e., NYT’s potential liability as defined in the governing tariff.

An administrative agency may retain jurisdiction of a matter even if the agency lacks the authority to award the relief sought (see, Alberta Gas Chems. v Celanese Corp., 650 F2d 9, 13-14; Heller v Coca-Cola Co., 230 AD2d 768, 770, lv dismissed and denied 89 NY2d 856), and we believe that NYT’s reliance on Staatsburg Water Co. v Staatsburg Fire Dist. (72 NY2d 147) for a contrary conclusion is misplaced. There, the PSC had rendered what the Court of Appeals characterized as an “unsolicited advisory opinion made outside the context of any complaint pending before the agency,” thereby depriving the defendant of an opportunity to litigate the issues (id., at 153-154). Notably, the Court indicated that its reasoning may have differed if a complaint had been lodged with the PSC (id., at 154). Here, a procedural ruling issued prior to the commencement of the proceeding clearly listed NYT’s liability to the IPs as an issue to be resolved, and the voluminous record indicates that NYT had an adequate opportunity to litigate the issue. Accordingly, we conclude that the PSC acted within the parameters of its statutory authority in issuing findings of fact at the conclusion of the investigation regarding NYT’s gross negligence and willful misconduct.

Next, we reject NYT’s contention that it was held to a heightened standard of care. To the contrary, we conclude that, taken as a whole, the ALJ’s decision properly embodied and reflected the correct legal standards.

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Bluebook (online)
271 A.D.2d 35, 707 N.Y.S.2d 534, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-york-telephone-co-v-public-service-commission-nyappdiv-2000.