Title: Discount Cellular, Inc. v. Pub. Util. Comm.

State: ohio

Issuer: Ohio Supreme Court

Document:

[Cite as Discount Cellular, Inc. v. Pub. Util. Comm., 112 Ohio St.3d 360, 2007-Ohio-53.] 
 
 
 
DISCOUNT CELLULAR, INC., ET AL., APPELLANTS, v. PUBLIC UTILITIES 
COMMISSION OF OHIO ET AL., APPELLEES. 
[Cite as Discount Cellular, Inc. v. Pub. Util. Comm., 
112 Ohio St.3d 360, 2007-Ohio-53.] 
Public utilities — Deregulation of telephone services — Retroactivity of order of 
Public Utilities Commission granting exemption from regulations — R.C. 
4927.03 — Procedural requirements for exemption order under former 
R.C. 4927.03(A)(1) — Motion for rehearing as prerequisite to appeal from 
decision of Public Utilities Commission. 
(Nos. 2005-2209, 2005-2368, 2005-2369, and 2005-2370 — Submitted  
October 3, 2006 — Decided January 24, 2007.) 
APPEALS from the Public Utilities Commission of Ohio, 
Nos. 04-236-RC-CSS, 05-190-RC-CSS, 05-811-RC-CSS, and 05-812-RC-CSS. 
__________________ 
 
LUNDBERG STRATTON, J. 
Background 
{¶ 1} These are appeals as of right by appellants, Discount Cellular, Inc. 
(“Discount Cellular” or “Discount”), Richards Ltd., Inc., d.b.a. Advanced Cellular 
and Paging Services (“Advanced Cellular”), Intermessage Wireless Associates, 
Ltd. (“Intermessage Wireless”), and Jeff Rand Corporation, d.b.a. Wireless Outlet 
(“Wireless Outlet”), from orders of the Public Utilities Commission of Ohio 
(“commission” or “PUCO”) in case Nos. 04-236-RC-CSS, 05-190-RC-CSS, 05-
811-RC-CSS, and 05-812-RC-CSS.  Ameritech Mobile Communications, L.L.C., 
with Cincinnati SMSA Limited Partnership (“Ameritech” or “intervenors”), and 
Verizon Wireless (“Verizon” or “intervenors”) have intervened as appellees. 
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{¶ 2} Appellants are cellular telephone service resellers.  As such, 
appellants purchase cellular service on a wholesale basis, rebrand the service, and 
market it to the general public on a retail basis.  Intervenors are engaged in 
business as wholesale cellular telephone service providers. 
{¶ 3} The backdrop for these appeals is R.C. Chapter 4927, which the 
General Assembly enacted in 1988 to give the commission broad authority to 
implement alternative regulatory requirements and other deregulatory actions for 
the telecommunications industry in Ohio.  Am.Sub.H.B. No. 563, 142 Ohio Laws, 
Part III, 4369.  Specific to this matter, R.C. 4927.03(A)(1), as enacted,1 provided 
that the commission, “upon its own initiative or the application of a telephone 
company * * *, may, by order, exempt any telephone company or companies, as 
to any public telecommunications service except basic local exchange service, 
from any provision of Chapter 4505. or 4909. of the Revised Code or any rule or 
order issued under those chapters, or establish alternative regulatory requirements 
* * *; provided the commission finds that any such measure is in the public 
interest and either * * * [t]he telephone company or companies are subject to 
competition with respect to such public telecommunications service * * * [or] 
[t]he customers of such public telecommunications service have reasonably 
available alternatives.” 
{¶ 4} In 1993, the commission exercised its alternative regulatory 
authority and issued guidelines for the entire telecommunications industry.  See In 
the Matter of the Commission Investigation into the Implementation of Sections 
4927.01 Through 4927.05, Revised Code, as They Relate to Competitive 
Telecommunication Services, case No. 89-563-TP-COI (Oct. 22, 1993) (the “563 
Guidelines”).  In the 563 Guidelines, the commission determined that further 
                                                 
1.  R.C. 4927.03 was amended in 2005.  Some subsections were relettered, but insofar as relevant 
here, the former and current versions are the same in substance.  All references are to the former 
version, which was controlling during the time periods involved in this matter.  See 2005 
Am.Sub.H.B. No. 218, eff. Nov. 4, 2005. 
January Term, 2007 
3 
relaxation of its regulatory oversight of the cellular telephone market was 
warranted.  The commission found cellular telephone service to be a “competitive 
telecommunication service” but did not believe that complete deregulation was 
justified.  To that end, the commission decided to maintain certain regulatory 
requirements concerning the cellular wholesale industry in order to protect the 
public from anticompetitive conduct by wholesale providers of cellular telephone 
service. 
{¶ 5} Under the 563 Guidelines, the commission required that wholesale 
providers (1) provide access to cellular service on a nondiscriminatory basis to all 
cellular service resellers, affiliated and nonaffiliated alike, (2) maintain separate 
wholesale and retail operations, (3) maintain detailed written records of 
transactions between themselves and their affiliated cellular service resellers, and 
(4) maintain comprehensive records of all inquiries from potential resale 
customers and of transactions between the wholesalers and unaffiliated cellular 
service resellers.  The PUCO also made it clear that R.C. 4905.26 complaint 
proceedings remained available to address regulatory violations committed by 
cellular telephone service providers. 
{¶ 6} In 1999, the commission issued an order exempting cellular service 
providers from a number of existing regulatory requirements.  In the Matter of the 
Commission Investigation into the Alternative Regulatory Treatment of 
Commercial Mobile Radio Service Providers, case No. 99-1700-TP-COI (Dec. 
16, 1999) (the “1700 Order”).2  Specifically, the commission exempted cellular 
wholesale service providers from R.C. 4905.26 complaint proceedings.  The 
commission noted that future complaints alleging anticompetitive and 
discriminatory conduct by cellular service providers could be brought before the 
Federal Communications Commission (“FCC”).  The commission also exempted 
                                                 
2.  Commercial mobile radio service providers include mobile telephone, cellular telephone, 
paging, and personal communication service providers. 
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cellular service providers from R.C. 4905.33 (rebates, special rates, and free 
service prohibited), 4905.34 (exceptions), and 4905.35 (discriminatory conduct 
prohibited).  The commission further made other temporary exemptions that had 
been granted in the 563 Guidelines permanent. 
{¶ 7} On February 24, 2004, Discount Cellular filed a complaint 
pursuant to R.C. 4905.26 alleging that Ameritech had discriminated against 
Discount when it (1) failed to maintain separate wholesale and retail operations, 
(2) cross-subsidized its retail operations with profits generated through its 
wholesale operations, and (3) failed to provide Discount with cellular service at 
the same rates, terms, and conditions made available to Ameritech’s affiliated 
reseller.  Discount claimed that Ameritech’s actions violated R.C. 4905.10, 
4905.22, 4905.32, 4905.33, 4905.35, 4905.54, and 4909.18 and certain 
commission orders, including the 563 Guidelines.3 
{¶ 8} On August 3, 2005, the commission granted Ameritech’s motion to 
dismiss Discount’s complaint.  The commission’s dismissal was based on its 
determination in the 1700 Order that it would no longer consider R.C. 4905.26 
complaints against wholesale cellular service providers like Ameritech.  The 
commission explained that it had exempted wholesale providers in the 1700 Order 
from the regulatory requirements that formed the basis of Discount’s complaint, 
and it advised Discount to pursue its claims of anticompetitive conduct against 
Ameritech at the FCC. 
{¶ 9} Discount filed a timely application for rehearing.  On September 
28, 2005, the commission denied Discount’s application, again finding that it had 
relinquished jurisdiction over R.C. 4905.26 complaints against wholesale cellular 
service providers in the 1700 Order.  The commission additionally noted, for the 
first time, that R.C. 4905.26 “necessitates a finding by the Commission that there 
                                                 
3.  Discount also alleged violations of the PUCO’s orders in case Nos. 84-944-TP-COI and 86-
1144-TP-COI.  Detailed discussion of those orders is not necessary to resolve the issues before us.  
January Term, 2007 
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are reasonable grounds for the complaint, as a prerequisite to proceeding with 
such complaint.  In this case, the Commission never made a finding that 
reasonable grounds existed for Discount’s complaint.” 
{¶ 10} Advanced Cellular, Intermessage Wireless, and Wireless Outlet 
also filed complaints against several wholesale cellular service providers, 
including intervenors, Ameritech and Verizon.  These complaints made 
allegations of discriminatory and anticompetitive conduct similar to those alleged 
in Discount Cellular’s complaint.  On October 12, 2005, the commission 
dismissed the complaints on the authority of the order and rehearing entry in the 
Discount Cellular case.  On December 7, 2005, the commission denied 
applications for rehearing. 
{¶ 11} Discount Cellular initiated the appeal in case No. 2005-2209 by 
filing a notice of appeal on November 22, 2005, following the rehearing entry of 
the commission dated September 28, 2005.  On December 19, 2005, Advanced 
Cellular, Intermessage Wireless, and Wireless Outlet initiated the appeals in case 
Nos. 2005-2368, 2005-2369, and 2005-2370, following the commission’s 
rehearing entry on December 7, 2005. 
{¶ 12} On January 26, 2006, we granted a motion to consolidate all four 
appeals for briefing, oral argument, and final decision.  Appellants’ appeals as of 
right are now before this court. 
Standard of Review 
{¶ 13} “R.C. 4903.13 provides that a PUCO order shall be reversed, 
vacated, or modified by this court only when, upon consideration of the record, 
the court finds the order to be unlawful or unreasonable.”  Constellation 
NewEnergy, Inc. v. Pub. Util. Comm., 104 Ohio St.3d 530, 2004-Ohio-6767, 820 
N.E.2d 885, ¶ 50.  We will not reverse or modify a PUCO decision as to questions 
of fact when the record contains sufficient probative evidence to show that the 
commission’s decision was not manifestly against the weight of the evidence and 
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was not so clearly unsupported by the record as to show misapprehension, 
mistake, or willful disregard of duty.  Monongahela Power Co. v. Pub. Util. 
Comm., 104 Ohio St.3d 571, 2004-Ohio-6896, 820 N.E.2d 921, ¶ 29.  The 
appellant bears the burden of demonstrating that the PUCO’s decision is against 
the manifest weight of the evidence or is clearly unsupported by the record.  Id. 
{¶ 14} Although we have “complete and independent power of review as 
to all questions of law” in appeals from the PUCO, Ohio Edison Co. v. Pub. Util. 
Comm. (1997), 78 Ohio St.3d 466, 469, 678 N.E.2d 922, we may rely on the 
expertise of a state agency in interpreting a law where “highly specialized issues” 
are involved and “where agency expertise would, therefore, be of assistance in 
discerning the presumed intent of our General Assembly.”  Consumers’ Counsel 
v. Pub. Util. Comm. (1979), 58 Ohio St.2d 108, 110, 12 O.O.3d 115, 388 N.E.2d 
1370. 
Propositions of Law No. 3 and No. 4 
Administrative Rulemaking Procedures 
{¶ 15} In proposition of law No. 3, appellants claim that the 1700 Order 
cannot form the basis to dismiss its complaints because the PUCO failed to 
comply with the statutory rulemaking procedures set forth in R.C. 111.15.  
Appellants maintain that the 1700 Order is a rule and therefore that the PUCO 
was required to file it with the secretary of state, the Legislative Service 
Commission, and the Joint Committee on Agency Rule Review, as R.C. 
111.15(B) requires.  Appellants also argue that the 1700 Order is a rule of general 
application that must be codified in the Ohio Administrative Code.  See R.C. 
111.15(C). 
{¶ 16} In proposition of law No. 4, appellants similarly maintain that the 
1700 Order is invalid because the PUCO failed to comply with the procedural 
rule-making requirements (public notice, a hearing, filing with the executive and 
January Term, 2007 
7 
legislative branches, an accurate rule summary, and a fiscal analysis) outlined in 
R.C. Chapter 119. 
{¶ 17} However, the PUCO was not required to follow the traditional 
administrative rulemaking process in granting the type of exemptions and 
alternative regulatory requirements authorized in the 1700 Order.  At the time of 
the order, R.C. 4927.03(A)(1) provided that the PUCO, “upon its own initiative or 
the application of a telephone company or companies, after notice, after affording 
the public and any affected telephone company a period for comment, and after a 
hearing if it considers one necessary, may, by order, exempt any telephone 
company or companies, as to any public telecommunications service except basic 
local exchange service, from any provision of Chapter 4905. or 4909. of the 
Revised Code or any rule or order issued under those chapters, or establish 
alternative regulatory requirements to apply to such public telecommunications 
service and company or companies; provided the commission finds that any such 
measure is in the public interest and either * * * [t]he telephone company or 
companies are subject to competition with respect to such public 
telecommunications service [or] * * * [t]he customers of such public 
telecommunications service have reasonably available alternatives.”  (Emphasis 
added.)  1988 Am.Sub.H.B. No. 563, 142 Ohio Laws, Part III, 4369, 4372. 
{¶ 18} Thus, the General Assembly has expressly granted the PUCO the 
authority to exempt, by order, telephone companies from the requirements of 
certain statutes, rules, and orders and from traditional regulatory requirements.  
Further, the PUCO can do this without a hearing.  In enacting R.C. 4927.03, the 
General Assembly chose to require only a streamlined process.  See Stephens v. 
Pub. Util. Comm., 102 Ohio St.3d 44, 2004-Ohio-1798, 806 N.E.2d 527, ¶ 13.  
Had the General Assembly wanted to require the PUCO to engage in 
administrative rulemaking before exercising its alternative regulatory authority, it 
presumably would have chosen words to that effect. 
SUPREME COURT OF OHIO 
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{¶ 19} Nevertheless, appellants contend that the 1700 Order is a rule 
subject to the requirements of R.C. 111.15(B) and (C) and R.C. Chapter 119.  
They contend that in New Par v. Pub. Util. Comm., 98 Ohio St.3d 277, 2002-
Ohio-7245, 781 N.E.2d 1008, we recognized that the 563 Guidelines were a rule.  
Thus, according to appellants, “the fact that the 1700 Order radically changes, and 
even eliminates, the rules embodied in the 563 Order [i.e., the 563 Guidelines] 
means that the 1700 Order is automatically a ‘rule.’ ” 
{¶ 20} However, whether the 563 Guidelines are a rule or an order has no 
relevance to this issue.  R.C. 4927.03(A)(1) specifically allows the PUCO to issue 
an order exempting telephone companies from any “rule or order” issued under 
R.C. Chapters 4905 or 4909.  In any event, we did not hold in New Par that the 
563 Guidelines were a rule.  Rather, we held that the 563 Guidelines were valid 
because they were issued before legislation was enacted subjecting the PUCO to 
the rulemaking procedures of R.C. 111.15 and R.C. Chapter 119.  In other words, 
we merely rejected the argument that if the 563 Guidelines were a rule, they were 
adopted improperly.  New Par, 98 Ohio St.3d 277, 2002-Ohio-7245, 781 N.E.2d 
1008, at ¶ 12-13. 
{¶ 21} Accordingly, we find that the PUCO properly exercised its 
statutory authority under R.C. 4927.03(A)(1) to deregulate any public 
telecommunications service except basic local exchange service “by order” when 
it issued the 1700 Order.  R.C. 111.15 and R.C. Chapter 119 were not applicable 
to the 1700 proceedings.  Similarly, there was no requirement that the 1700 Order 
be codified in the Ohio Administrative Code, because the PUCO was not engaged 
in rulemaking when it issued the 1700 Order.  Thus, we reject propositions of law 
Nos. 3 and 4. 
Proposition of Law No. 2 
Alternative Regulation under R.C. 4927.03(A) and (D) 
January Term, 2007 
9 
{¶ 22} In proposition of law No. 2, appellants argue that the PUCO failed 
to comply with the notice and hearing requirements in former R.C. 4927.03(D) 
before issuing the 1700 Order.  Appellants maintain that, pursuant to R.C. 
4927.03(D), the PUCO is statutorily required to hold a hearing before it may 
modify an existing order or rule that grants an exemption or establishes alternative 
requirements.  Appellants contend that the 1700 Order is invalid because it 
modified the 563 Guidelines without the PUCO providing proper notice and a 
hearing. 
{¶ 23} R.C. 4927.03(D)4 provided: 
{¶ 24} “The public utilities commission has jurisdiction over every 
telephone company providing a public telecommunications service that has 
received an exemption or for which alternative regulatory requirements have been 
established pursuant to this section.  As to any such company, the commission, 
after notice and hearing, may abrogate or modify any order so granting an 
exemption or establishing alternative requirements if it determines that the 
findings upon which the order was based are no longer valid and that the 
abrogation or modification is in the public interest.  No such abrogation or 
modification shall be made more than eight years after the date an order granting 
an exemption or establishing alternative requirements under this section was 
entered upon the commission’s journal, unless the affected telephone company or 
companies consent.” 
{¶ 25} The purpose of R.C. 4927.03(D) is not to require the PUCO to 
hold a hearing whenever it seeks to modify an existing exemption or alternative 
regulation granted pursuant to R.C. 4927.03.  Rather, R.C. 4927.03(D) applies 
only when the PUCO is attempting to revoke or diminish an exemption or 
alternative regulatory relief that it had previously granted to a telephone company.  
                                                 
4.  The quoted language now appears in R.C. 4927.03(C), except that the statute now imposes a 
five-year limit. 
SUPREME COURT OF OHIO 
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This construction is bolstered by the language in R.C. 4927.03(D) that “[n]o such 
abrogation or modification shall be made more than eight years after the date an 
order granting an exemption or establishing alternative requirements under this 
section was entered upon the commission’s journal, unless the affected telephone 
company or companies consent.”  (Emphasis added.)  It would be pointless to 
require telephone companies to consent to further deregulation.  Rather, the more 
sensible interpretation would require a company’s consent only if the PUCO 
attempts to remove or diminish a statutory exemption or alternative regulation 
more than eight years after it was granted. 
{¶ 26} Moreover, appellants’ construction of the statute would make it 
more difficult to modify an already existing exemption than it would be to grant it 
in the first place.  Appellants concede that when first issuing a statutory 
exemption or an alternative regulation under R.C. 4927.03(A)(1), the PUCO is 
not required to hold a hearing.  Yet appellants argue that any additional 
deregulation by way of modifying an existing exemption or alternative regulation 
would require the PUCO to hold an evidentiary hearing.  That cannot be the result 
that the General Assembly intended.  We must presume that the General 
Assembly intended a “just and reasonable result” in enacting a statute.  R.C. 
1.47(C). 
{¶ 27} The 1700 Order, for the first time, exempted telephone companies 
from the requirements of R.C. 4905.26, 4905.33, 4905.34, and 4905.35 and made 
permanent other alternative regulations established in the 563 Order.  The 1700 
Order did not abrogate or diminish any previously granted statutory exemptions 
or alternative regulatory treatment.  Therefore, we conclude that R.C. 4927.03(D) 
was not applicable. 
{¶ 28} Appellants also argue under this proposition of law that the 1700 
Order is invalid because the PUCO failed to provide public notice, which they 
claim was required by R.C. 4927.03(A)(1).  However, R.C. 4927.03(A)(1) 
January Term, 2007 
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requires only “notice,” and it does not specify to whom notice should be provided, 
how often, or in what form.  We have already recognized that R.C. 4927.03(A)(1) 
requires “only a streamlined ‘notice and comment’ process * * * [that] simply 
requires comments by interested parties.”  Stephens, 102 Ohio St.3d 44, 2004-
Ohio-1798, 806 N.E.2d 527, at ¶ 13.  If public notice were required, the General 
Assembly would have used language to that effect, as it has done in other 
instances.  See, e.g., R.C. 4909.18 (requiring public notice in a general-circulation 
newspaper in each county affected by an application containing proposals deemed 
potentially unjust or unreasonable), 4909.19 (requiring newspaper publication 
regarding an application for a rate increase), and 4905.26 (notice of hearing 
required in a general-circulation newspaper in the county or counties affected by a 
complaint). 
{¶ 29} In relation to the 1700 Order, notice was disseminated to a long list 
of interested parties, including several telephone companies and cellular service 
resellers, the Ohio Telecommunication Industry Association, the Office of 
Consumers’ Counsel, and other public representatives.  Based on the foregoing, 
we overrule proposition of law No. 2. 
Proposition of Law No. 5 
Equal Protection 
{¶ 30} Appellants argue in proposition of law No. 5 that the PUCO’s 
decision to allow Cellnet to litigate its claims against intervenors, while 
preventing all other similarly situated resellers of cellular service from asserting 
identical claims involving the same legal rights, violated the equal protection 
guarantees of the United States and Ohio Constitutions. 
{¶ 31} “The limitations placed upon governmental action by the federal 
and state Equal Protection Clauses are essentially the same.”  McCrone v. Bank 
One Corp., 107 Ohio St.3d 272, 2005-Ohio-6505, 839 N.E.2d 1, at ¶ 7.  The 
SUPREME COURT OF OHIO 
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Equal Protection Clauses require that all similarly situated individuals be treated 
in a similar manner.  Id. at ¶ 6. 
{¶ 32} Appellants are not a suspect class, nor do they argue that a 
fundamental right is implicated, entitling them to a higher level of scrutiny for 
purposes of equal protection analysis.  See State v. Williams (2000), 88 Ohio 
St.3d 513, 530, 728 N.E.2d 342.  “A statutory classification which involves 
neither a suspect class nor a fundamental right does not violate the Equal 
Protection Clause of the Ohio or United States Constitutions if it bears a rational 
relationship to a legitimate governmental interest.”  Menefee v. Queen City Metro 
(1990), 49 Ohio St.3d 27, 29, 550 N.E.2d 181. 
{¶ 33} Under the rational-basis standard, a state has no obligation to 
produce evidence to sustain the rationality of a statutory classification.  Am. Assn. 
of Univ. Professors, Cent. State Univ. Chapter v. Cent. State Univ. (1999), 87 
Ohio St.3d 55, 58 and 60, 717 N.E.2d 286.  Rather, the challenger bears the 
burden to negate every conceivable basis that might support the legislation.  Id. at 
58, 717 N.E.2d 286. 
{¶ 34} Appellants offer little argument or authority to support their equal 
protection claim.  The PUCO applied R.C. 4927.03(A)(1) through the 1700 Order 
to exempt wholesale cellular service providers from future R.C. 4905.26 
complaint proceedings.  In the 1700 Order, the PUCO allowed Cellnet, whose 
complaint was filed before the 1700 Order was rendered, to litigate its claims 
against wholesale providers. 
{¶ 35} However, creating a distinction between those resellers who filed 
complaints before the 1700 Order and those who filed after the order does not, 
standing alone, deny equal protection.  “[D]istinctions are invalidated only where 
‘they are based solely on reasons totally unrelated to the pursuit of the State’s 
goals and only if no grounds can be conceived to justify them.’ ”  State v. 
January Term, 2007 
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Williams, 88 Ohio St.3d at 530, 728 N.E.2d 342, quoting Clements v. Fashing 
(1982), 457 U.S. 957, 963, 102 S.Ct. 2836, 73 L.Ed.2d 508. 
{¶ 36} Appellants have not met their burden of showing that exempting 
wholesale providers from R.C. 4905.26 complaint proceedings after a certain date 
is not rationally related to a legitimate state interest.  Thus, there is no basis to 
find that the PUCO’s application of the 1700 Order violated equal protection.  We 
therefore reject appellants’ fifth proposition of law. 
Proposition of Law No. 6 
Due Process 
{¶ 37} Appellants argue in proposition of law No. 6 that the PUCO 
violated their rights to due process under the United States and Ohio Constitutions 
when the commission enforced the 1700 Order against them without notice, 
service, or a hearing.  Appellants claim that the PUCO failed to provide them with 
required notice of the 1700 Order and that they were never given an opportunity 
to be heard before their rights were extinguished by that order. 
{¶ 38} Appellants are merely renewing arguments that we have already 
addressed in our discussion of propositions of law No. 3 and No. 4 (failure to 
comply with R.C. 111.15 and R.C. Chapter 119 rulemaking procedures) and 
proposition of law No. 2 (failure to provide public notice and hearing before 
issuing the 1700 Order).  Moreover, we have repeatedly held that there is no 
constitutional right to notice and hearing in utility-related matters if no statutory 
right to a hearing exists.  See Consumers’ Counsel v. Pub. Util. Comm. (1994), 70 
Ohio St.3d 244, 248-249, 638 N.E.2d 550; MCI Telecommunications Corp. v. 
Pub. Util. Comm. (1987), 32 Ohio St.3d 306, 310, 513 N.E.2d 337; Cleveland v. 
Pub. Util. Comm. (1981), 67 Ohio St.2d 446, 453, 21 O.O.3d 279, 424 N.E.2d 
561.  R.C. 4927.03(A)(1) does not require the PUCO to hold a hearing.  As 
appellants were not statutorily entitled to notice and a hearing in the 1700 case, 
we overrule proposition of law No. 6. 
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Proposition of Law No. 1 
Retroactive Application of 1700 Order 
{¶ 39} In proposition of law No. 1, appellants contend that the PUCO 
violated Ohio law by retroactively applying the 1700 Order to eliminate vested 
rights acquired under prior laws.  Appellants argue that they had a statutory right 
to file a cause of action against wholesale cellular service providers that accrued 
prior to the 1700 Order’s elimination of R.C. 4905.26 complaints. 
{¶ 40} The PUCO issued the 1700 Order on December 16, 1999.  In the 
1700 Order, the PUCO, pursuant to R.C. 4927.03(A)(1), exempted wholesale 
providers from all future complaints brought under R.C. 4905.26.  Appellants 
filed complaints in 2004 and 2005 alleging past violations of Ohio law prohibiting 
discriminatory and anticompetitive methods and means of providing cellular 
service.  Appellants maintain that their causes of action accrued before the 1700 
Order was issued, when the alleged unlawful conduct occurred.  Appellants claim 
that the PUCO retroactively applied the 1700 Order to eliminate their causes of 
action and that this violated Section 28, Article II of the Ohio Constitution. 
{¶ 41} Section 28, Article II prohibits the General Assembly from passing 
retroactive laws and protects vested rights from new legislative encroachments.  
Vogel v. Wells (1991), 57 Ohio St.3d 91, 99, 566 N.E.2d 154.  Because R.C. 1.48 
establishes a presumption that statutes are prospective in operation, we must first 
determine whether the General Assembly expressly intended the statute to apply 
retroactively.  State v. Cook (1998), 83 Ohio St.3d 404, 410, 700 N.E.2d 570, 
citing Van Fossen v. Babcock & Wilcox Co. (1988), 36 Ohio St.3d 100, 522 
N.E.2d 489, paragraph one of the syllabus.  Only if we find that the General 
Assembly intended the statute to apply retroactively do we then consider whether 
the statute is substantive, rendering it unconstitutionally retroactive, rather than 
merely remedial.  Cook at 410-411, 700 N.E.2d 570. 
January Term, 2007 
15 
{¶ 42} R.C. 4927.03 was enacted as part of Am.Sub.H.B. No. 563 and 
became effective on March 17, 1989.  Neither the statute nor H.B. No. 563 
provides that the General Assembly intended for the statute to be applied 
retrospectively. Thus, it is presumed that the General Assembly intended for R.C. 
4927.03 to apply only to acts committed after the date the statute became 
effective. 
{¶ 43} Normally, whether a statute is applied prospectively or 
retroactively in a given case is judged from its effective date.  However, R.C. 
4927.03 is not self-executing; it requires some action by the PUCO to give effect 
to the exemptions and alternative regulations available thereunder.  Thus, the 
relevant date for determining whether R.C. 4927.03 was applied retroactively to 
this matter is December 16, 1999, the date when the PUCO issued the 1700 Order 
to eliminate complaint cases against wholesale cellular providers by exempting 
those providers from the requirements of R.C. 4905.26. 
{¶ 44} The PUCO and intervenors contend that the 1700 Order was not 
applied retroactively, because appellants’ complaints were filed well after the 
PUCO issued the 1700 Order exempting providers from reseller complaints.  We 
disagree. 
{¶ 45} The “words ‘retroactive’ and ‘retrospective’ have been used 
interchangeably in the constitutional analysis for more than a century.”  Bielat v. 
Bielat (2000), 87 Ohio St.3d 350, 353, 721 N.E.2d 28, citing State v. Cook, 83 
Ohio St.3d at 410, 700 N.E.2d 570.  “Both terms describe a law that is ‘made to 
affect acts or facts occurring, or rights accruing, before it came into force.’ ”  
Bielat, 87 Ohio St.3d at 353, 721 N.E.2d 28, quoting Black’s Law Dictionary (6th 
Ed.1990) 1317.  See, also, U.S.X. Corp. v. Ohio Unemp. Comp. Bd. of Rev. 
(1990), 70 Ohio App.3d 566, 569, 591 N.E.2d 818, citing E. Ohio Gas Co. v. 
Limbach (1986), 26 Ohio St.3d 63, 65-66, 26 OBR 54, 498 N.E.2d 453 
SUPREME COURT OF OHIO 
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(retroactive application of a statute usually occurs when the statute is applied to a 
time period preceding the effective date of the statute). 
{¶ 46} Appellants’ complaints center on matters that allegedly occurred 
before the PUCO issued the 1700 Order on December 16, 1999.  Before the 
issuance of the 1700 Order, laws and regulations in the form of the 563 
Guidelines were in effect that prohibited the complained-of conduct.  The 563 
Guidelines prohibited wholesale providers from engaging in anticompetitive 
conduct and discriminatory practices.  Among other things, providers were 
required by the 563 Guidelines to (1) offer access to their cellular services at 
terms, conditions, and prices that were universally available on a 
nondiscriminatory basis to affiliated and nonaffiliated resellers alike, (2) keep 
their wholesale and retail operations separate, and (3) maintain separate 
accounting records between the wholesale provider and its affiliated reseller. 
{¶ 47} In their complaints to the PUCO, appellants alleged that 
intervenors failed to comply with these and other provisions of the 563 
Guidelines.  Thus, at issue were the practices of the intervenors with respect to 
their wholesale and retail cellular operations before the PUCO issued the 1700 
Order.  In essence, appellants’ complaints ask for a declaration of their rights 
against intervenors on past facts and under laws existing prior to the 1700 Order.  
Compare GTE Mobilnet of Ohio v. Johnson (C.A.6, 1997), 111 F.3d 469, 481 
(discussing the Cellnet complaint case before the PUCO that raised claims 
essentially identical to those raised here).  Therefore, we find that the PUCO 
applied the 1700 Order retrospectively to dismiss causes of action alleging 
unlawful conduct occurring prior to the effective date of that order. 
{¶ 48} Language from the 1700 Order supports our determination.  
During its consideration of the 1700 case, the PUCO declined to dismiss a 
complaint filed by Cellnet, a cellular reseller like appellants, that raised 
essentially the same allegations as those raised in this matter.  The PUCO noted:  
January Term, 2007 
17 
“This Finding and Order applies prospectively.  The circumstances giving rise to 
the Cellnet complaint case pertain to the previously described paradigm in which 
facilities-based competition in the [commercial mobile radio service] market had 
not yet developed, and the complaint covers a period of time prior to this 
decision.  Therefore, [the Cellnet] complaint case is still appropriate for the 
Commission’s jurisdiction.”  (Emphasis added.)  The PUCO additionally stated, 
“Any prospective amendment of the existing [563 Guidelines] will have no 
impact on Cellnet’s ability to pursue its allegations pertaining to the violation of 
the Commission’s rules and regulations which were previously in effect and now 
potentially modified as a result of the [1700 Order] proceeding.” 
{¶ 49} When the PUCO issued its order resolving the Cellnet complaint 
case, it again emphasized that the statutory exemptions and alternative regulations 
granted in the 1700 Order were applicable on a “going forward basis” and that 
because the 1700 Order was prospective in nature it did not apply to the PUCO’s 
consideration of the Cellnet complaint case.  In the Matter of the Complaint of 
Westside Cellular, Inc., d.b.a. Cellnet v. New Par Cos. et al., case No. 93-1758-
RC-CSS (Jan. 18, 2001) at 36, fn. 55.  For instance, the PUCO noted that in 
considering the allegations raised in the Cellnet complaint, the PUCO “has simply 
engaged in an analysis of whether the respondents have violated the law * * * and 
that any determination to be issued in [Cellnet’s] case is retrospective in nature.”  
Id. at 32.  The PUCO stated further that the “563 requirements relative to cellular 
providers remained in effect until the recent issuance of the [1700 Order] in 
December 1999” and that the “regulatory framework [i.e., the 563 Guidelines and 
944 Order] in existence for the time frame covered by” the Cellnet complaint 
governed the Cellnet proceedings.  Id. at 48, 80. 
{¶ 50} Finally, the PUCO acknowledged in the Cellnet order that it was 
not prohibiting all future complaint cases alleging unlawful conduct by cellular 
wholesale providers.  Id. at 93.  Similarly, in a brief before the United States 
SUPREME COURT OF OHIO 
18 
Supreme Court in the Cellnet appeal, the PUCO recognized the possibility that a 
“similar complaint” might be brought raising the same allegations of misconduct 
occurring before the 1700 Order that formed the basis of Cellnet’s complaint.  
PUCO brief opposing petition for writ of certiorari in Cincinnati SMSA Ltd. 
Partnership v. Pub. Util. Comm. of Ohio, case No. 02-1711, certiorari denied 
(2003), 540 U.S. 938, 124 S.Ct. 78, 157 L.Ed.2d 250. 
{¶ 51} In sum, by applying the 1700 Order to dismiss appellants’ 
complaints, the PUCO altered the legal significance of the intervenors’ past 
conduct.  See E. Ohio Gas, 26 Ohio St.3d 63, 26 OBR 54, 498 N.E.2d 453.  The 
PUCO, as a creature of statute, has no authority to act beyond its statutory 
powers.  See Reading v. Pub. Util. Comm., 109 Ohio St.3d 193, 2006-Ohio-2181, 
846 N.E.2d 840, ¶ 13.  The General Assembly did not expressly state that R.C. 
4927.03 was to be applied retrospectively.  Therefore, we hold that the PUCO 
exceeded its statutory authority when it retroactively applied R.C. 4927.03 in this 
matter.  Accordingly, appellants’ first proposition of law is well taken. 
Proposition of Law No. 7 
Alternative Grounds for Dismissal 
{¶ 52} In their seventh proposition of law, appellants contend that the 
PUCO erred when it dismissed their complaints for failure to state reasonable 
grounds as R.C. 4905.26 requires.  The following facts are pertinent to appellants’ 
claim. 
{¶ 53} On August 3, 2005, the PUCO dismissed Discount Cellular’s 
complaint based in part on findings in the 1700 Order that the development of 
competition in the cellular market made it unnecessary to further subject 
wholesale providers to R.C. 4905.26 complaint proceedings.  In denying 
Discount’s rehearing application, the PUCO cited, for the first time, an additional 
basis for dismissing Discount’s complaint.  The PUCO noted that “Section 
4905.26, Revised Code, necessitates a finding by the Commission that there are 
January Term, 2007 
19 
reasonable grounds for the complaint, as a prerequisite to proceeding with such 
complaint.  In this case, the Commission never made a finding that reasonable 
grounds existed for Discount’s complaint.”  The PUCO further stated that, 
pursuant to R.C. 4905.26, “the Commission must find reasonable grounds for the 
complaint prior to taking jurisdiction and, as we have previously stated, no such 
finding was made in this case.  Furthermore, absent a finding of reasonable 
grounds there is no right to a hearing before the Commission.” 
{¶ 54} On October 12, 2005, the PUCO dismissed the complaints filed by 
Advanced Cellular, Intermessage Wireless, and Wireless Outlet on the authority 
of the final order and rehearing entry in the Discount Cellular case.  In denying 
applications for rehearing in these cases, the PUCO explicitly stated, for the first 
time, that “reasonable grounds do not exist to support further consideration of 
these complaints.  This is especially true, given the age and outdated nature of the 
allegations * * *.  Further, the intervening deregulation of [commercial mobile 
radio service] in Ohio shows the lack of any regulatory value or consumer 
relevance in adjudicating such stale claims.  Thus, although there is not an explicit 
statute of limitations applicable to complaints under Section 4905.26, Revised 
Code, the statutory reasonable grounds limitation enables the commission to 
apply reasonable limitations to dismiss such outdated claims to the extent that 
statute has any applicability here.” 
{¶ 55} Appellants maintain that the PUCO failed to apply the proper 
standard for deciding a motion to dismiss and also made incorrect factual findings 
that were contrary to the allegations stated in the complaint.  According to 
appellants, the PUCO abused its discretion by failing to take all allegations of the 
complaint as true and to construe all inferences in their favor. 
{¶ 56} Appellants, however, have waived this issue by not setting forth 
these specific grounds in any of their applications for rehearing.  R.C. 4903.10(B) 
provides that an application for rehearing “shall be in writing and shall set forth 
SUPREME COURT OF OHIO 
20 
specifically the ground or grounds on which the applicant considers the order to 
be unreasonable or unlawful.  No party shall in any court urge or rely on any 
ground for reversal, vacation, or modification not so set forth in the application.”  
We have held that setting forth specific grounds for rehearing is a jurisdictional 
prerequisite for our review.  Consumers’ Counsel v. Pub. Util. Comm., 70 Ohio 
St.3d at 247, 638 N.E.2d 550 (citing cases). 
{¶ 57} Appellants maintain that they have preserved all “reasonable 
grounds” claims in the seventh assignment of error in each of their applications 
for rehearing.  Appellants’ seventh assignment of error stated, “The commission 
erred in dismissing the complaint because the commission is required by R.C. 
4905.26 to hear complaints alleging violations of Ohio utility law.” 
{¶ 58} Contrary to appellants’ assertion, the seventh assignment of error 
on rehearing did not preserve the issues raised in the seventh proposition of law.  
In the seventh assignment of error, appellants state conclusively that the PUCO is 
required to hold a hearing under R.C. 4905.26 whenever the complaint alleges a 
violation of Ohio utility law.  Yet appellants make no mention of the specific 
issues set forth in the seventh proposition of law.  Nowhere in this assignment of 
error on rehearing do the appellants claim that the PUCO applied the wrong legal 
standard when reviewing a motion to dismiss.  Nor have appellants specifically 
alleged that the PUCO made incorrect factual findings when it found that 
appellants’ complaints failed to set forth reasonable grounds. 
{¶ 59} We have held that when an appellant’s grounds for rehearing fail 
to specifically allege in what respect the PUCO’s order was unreasonable or 
unlawful, the requirements of R.C. 4903.10 have not been met.  Marion v. Pub. 
Util. Comm. (1954), 161 Ohio St. 276, 278-279, 53 O.O. 148, 119 N.E.2d 67; 
Cincinnati v. Pub. Util. Comm. (1949), 151 Ohio St. 353, 378, 39 O.O. 188, 86 
N.E.2d 10, and paragraph 17 of the syllabus; Conneaut Tel. Co. v. Pub. Util. 
Comm. (1967), 10 Ohio St.2d 269, 270, 39 O.O.2d 432, 227 N.E.2d 409.  Further, 
January Term, 2007 
21 
we have strictly construed the specificity test set forth in R.C. 4903.10.  
Consumers’ Counsel v. Pub. Util. Comm., 70 Ohio St.3d at 248, 638 N.E.2d 550.  
By using the language set forth in R.C. 4903.10, “ ‘the General Assembly 
indicated clearly its intention to deny the right to raise a question on appeal where 
the appellant’s application for rehearing used a shotgun instead of a rifle to hit 
that question.’ ”  Id., quoting Cincinnati v. Pub. Util. Comm., 151 Ohio St. at 378, 
39 O.O. 188, 86 N.E.2d 10. 
{¶ 60} Here, appellants’ grounds for rehearing allege nothing more than 
broad, general claims, and they failed to set forth specifically the same errors 
alleged in their seventh proposition of law.  Thus, we hold that appellants have 
failed to preserve these issues. 
{¶ 61} Appellants also complain under the seventh proposition of law that 
the PUCO “invent[ed]” its erroneous reasonable-grounds rationale for the first 
time in its rehearing order in the Discount Cellular case instead of in the order 
granting the motion to dismiss.5  R.C. 4903.10 provides: 
{¶ 62} “Where such application for rehearing has been filed, the 
commission may grant and hold such rehearing on the matter specified in such 
application, if in its judgment sufficient reason therefor is made to appear. * * * 
{¶ 63} “* * * 
{¶ 64} “If, after such rehearing, the commission is of the opinion that the 
original order or any part thereof is in any respect unjust or unwarranted, or 
should be changed, the commission may abrogate or modify the same; otherwise 
such order shall be affirmed.  An order made after such rehearing, abrogating or 
modifying the original order, shall have the same effect as an original order * * 
*.” 
                                                 
5.  The PUCO incorporated the Discount rehearing entry into the order dismissing the other three 
complaints.  As a result, only the order dismissing Discount’s complaint failed to rely on 
reasonable grounds as a basis for dismissal.   
SUPREME COURT OF OHIO 
22 
{¶ 65} R.C. 4903.10 appears to permit the PUCO to modify an order only 
after granting an application for rehearing.  Here, the PUCO denied Discount 
Cellular’s application for rehearing.  As a result, the PUCO acted beyond its 
statutory authority when it cited in its rehearing order an additional reason for 
dismissing Discount’s complaint. 
{¶ 66} However, Discount also failed to preserve this issue in an 
application for rehearing.  R.C. 4903.10 provides that “[a]fter any order has been 
made by the public utilities commission, any party * * * in the proceeding may 
apply for a rehearing in respect to any matters determined in the proceeding.”  
(Emphasis added.)  See Senior Citizens Coalition v. Pub. Util. Comm. (1988), 40 
Ohio St.3d 329, 333, 533 N.E.2d 353 (R.C. 4903.10 is jurisdictional, permits an 
application for rehearing after any order, and requires an application for rehearing 
to preserve the right to appeal an issue).  Discount did not file a second 
application for rehearing challenging the PUCO’s additional grounds for 
dismissal.  Moreover, Discount did not set forth this specific claimed error in its 
notice of appeal to this court, and the failure to set forth alleged errors in the 
notice of appeal delimits the issues for our consideration.  R.C. 4903.13; 
Cincinnati Gas & Elec. Co. v. Pub. Util. Comm., 103 Ohio St.3d 398, 2004-Ohio-
5466, 816 N.E.2d 238, at ¶ 21.  Thus, Discount has lost the right to question the 
unlawfulness of the PUCO’s orders. 
{¶ 67} For the foregoing reasons, we reject appellants’ seventh 
proposition of law. 
Conclusion 
{¶ 68} For the reasons explained above, we hold that appellants’ 
propositions of law No. 2 (R.C. 4927.03 procedural requirements), No. 3 (R.C. 
111.15 rulemaking procedures), No. 4 (R.C. Chapter 119 rulemaking procedures), 
No. 5 (equal protection), and No. 6 (due process) are without merit.  We hold that 
proposition of law No. 1 (impermissible retroactive application of 1700 Order) is 
January Term, 2007 
23 
well taken.  However, the PUCO set forth an alternative ground for dismissal.  
Although appellants challenge the alternative ground for dismissal, they failed to 
properly preserve this issue on rehearing (proposition No. 7).  Accordingly, we 
affirm the PUCO’s orders. 
Orders affirmed. 
 
MOYER, C.J., KLATT, O’CONNOR, O’DONNELL and LANZINGER, JJ., 
concur. 
 
PFEIFER, J., concurs in judgment only. 
 
WILLIAM A. KLATT, J., of the Tenth Appellate District, was assigned to sit 
for RESNICK, J., whose term ended on January 1, 2007. 
 
CUPP, J., whose term began on January 2, 2007, did not participate in the 
consideration or decision of this case. 
__________________ 
 
Randy J. Hart, Mark Griffin, and Carla Tricarichi, for appellants. 
 
Marc Dann, Attorney General, Duane Luckey, Senior Deputy Attorney 
General, and Thomas W. McNamee, Assistant Attorney General, for appellee 
Public Utilities Commission of Ohio. 
 
Porter, Wright, Morris & Arthur, Kathleen M. Trafford, and Hugh E. 
McKay; Kirkland & Ellis, L.L.P., Stephen R. Patton, and Robert R. Gasaway, for 
intervening appellee Verizon Wireless. 
 
Calfee, Halter & Griswold, L.L.P., Mark I. Wallach, James F. Lang, and 
Michael 
T. 
Mulcahy, 
for 
intervening 
appellees 
Ameritech 
Mobile 
Communications, L.L.C., and Cincinnati SMSA Limited Partnership. 
______________________