Title: Bellsouth Telecommunications, Inc. V. Jacobs

State: florida

Issuer: Florida Supreme Court

Document:

Supreme 
Court 
of 
Florida
____________
No. SC01-2205
____________
BELLSOUTH TELECOMMUNICATIONS, INC.,
Appellant,
vs.
E. LEON JACOBS, JR., et al.,
Appellees.
[October 31, 2002]
LEWIS, J.
We have on appeal a decision of the Florida Public Service Commission
relating to the rates of a telephone utility.  We have jurisdiction under article V,
section 3(b)(2) of the Florida Constitution.
Facts and Procedural History
In 1986, BellSouth Telecommunications (BellSouth, or the Company)
instituted a 1.50% charge on all balances in excess of $1.00 that consumers failed
to pay before the passing of certain due dates set by the Company, commonly
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referred to as a late payment charge.  This charge was approved by the Public
Service Commission (PSC, or the Commission) in all respects.  On January 1,
1996, BellSouth became a price-regulated local exchange company subject to the
restrictions contained in chapter 364 of the Florida Statutes.  On July 9, 1999, the
Company filed a tariff with the PSC in which it restructured the late payment
charge, which had been submitted in 1986.  Under this filing, BellSouth would
apply a charge of $1.50 for residential customers and $9.00 for business
customers, plus an interest charge of 1.50% on unpaid balances in excess of $6.00.
Because BellSouth is a price-regulated local exchange company, its tariff
filing was treated as presumptively valid, and it properly became effective on July
24, 1999, fifteen days after being filed.  See § 364.051(5)(a), Fla. Stat. (2001).  The
tariff provisions themselves began affecting Florida telecommunications consumers
on August 28, 1999.  On June 19, 2000, the PSC opened a docket entry to
investigate whether BellSouth’s revised payment structure violated the price
increase limitation contained in section 364.051 of the Florida Statutes. 
Subsequently, in Order No. PSC-00-1357-PAA-TL, the Commission issued a
proposed action finding the 1999 tariff filing in violation of section 364.051(5)(a),
Florida Statutes.  In a timely protest of the proposed action, BellSouth petitioned
the PSC for a formal hearing on the matter.  Subsequently, BellSouth and the
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Office of Public Counsel jointly requested that the Commission resolve the dispute
without a hearing.  Therefore, the PSC canceled the hearing and directed the parties
to file briefs.
On August 30, 2001, the PSC delivered its final order.  See Final Order
BellSouth Late Payment Charge Tariff Filing, Docket No. 000733-TL; Order No.
PSC-01-1769-FOF-TL (Aug. 30, 2001).  The Commission held that the late
payment charge is properly characterized as a “service” under chapter 364, and that
it is not a “new” service exempt from the price cap provisions of section
364.051(5)(a) for the first twelve months the service is offered.  Based upon its
conclusion that the restructured charge belonged in the miscellaneous nonbasic
services category tariff basket, the Commission then calculated the impact of the
charge upon that category of BellSouth’s revenue.  The restructuring resulted in a
projected increase in revenue allotted to this basket from $44,808,752 to
$70,687,801--a 57.75% increase.  The Commission deemed this percentage
increase “clearly in violation of section 364.051(5)(a).”
This appeal followed.
Analysis
It is well established that “orders of the Commission come before this Court
clothed with the statutory presumption that they have been made within the
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Commission’s jurisdiction and powers, and that they are reasonable and just and
such as ought to have been made.”  GTC, Inc. v. Garcia, 791 So. 2d 452, 456 (Fla.
2000) (quoting United Tel. Co. v. Public Serv. Comm’n, 496 So. 2d 116, 118 (Fla.
1986)); see also BellSouth Telecomms., Inc. v. Johnson, 708 So. 2d 594, 596 (Fla.
1998); Florida Interexchange Carriers Ass’n v. Clark, 678 So. 2d 1267, 1270 (Fla.
1996); Gen. Tel. Co. of Fla. v. Carter, 115 So. 2d 554, 556-57 (Fla. 1959). 
Therefore, unless the Commission exceeds its statutory authority, its determinations
are accorded substantial deference by this Court.  See GTC, 791 So. 2d at 457.
Additionally, the PSC’s “interpretation of a statute it is charged with
enforcing is entitled to great deference and will be approved by this Court if it is not
clearly erroneous.”  Florida Interexchange Carriers, 678 So. 2d at 1270;
see also GTC, 791 So. 2d at 459; BellSouth Telecomms., 708 So. 2d at 596-97. 
The party challenging the Commission’s order bears the burden of overcoming the
presumptions by showing a departure from the essential requirements of law.  See
GTC, 791 So. 2d at 459; BellSouth Telecomms., 708 So. 2d at 596-97; Florida
Interexchange Carriers, 678 So. 2d at 1270.  Thus, we review the decision of the
PSC with considerable deference to its conclusions.
Chapter 364, Florida Statutes, creates a price regulation scheme for all “local
exchange telecommunications companies.”  See § 364.051(1), Fla. Stat. (2001). 
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There is no dispute that BellSouth, by virtue of being a “company certified by the
commission to provide local exchange telecommunications service in this state on
or before June 30, 1995,” § 364.02(6), Fla. Stat. (2001), is subject to the regulatory
strictures of chapter 364.  Therefore, under section 364.051(5)(a), BellSouth is
authorized to set or change the rate for each of its nonbasic services, “except that a
price increase for any nonbasic service category shall not exceed 6 percent within a
12-month period.”  Id.  
Because the statutory construct is so clear, it is plain that if a BellSouth
charge or fee is deemed to be within a preexisting “nonbasic service category,” any
tariff filing with the Commission may not subject the Company’s
telecommunications customers to rate increases for such item greater than six
percent in any one-year period.  For this reason, an essential issue before this Court
is whether the newly restructured late payment charge is within a “nonbasic service
category.”  Section 364.02 offers the following definitions germane to the instant
case:
(2) “Basic local telecommunications service” means voice-
grade, flat-rate residential, and flat-rate single-line business local
exchange services which provide a dial tone, local usage necessary to
place unlimited calls within a local exchange area, dual tone
multifrequency dialing, and access to the following: emergency
services such as “911,” all locally available interexchange companies,
directory assistance, operator services, relay services, and an
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alphabetical directory listing. . . .
. . . .
(8) “Nonbasic service” means any telecommunications service
provided by a local exchange telecommunications company other than
a basic local telecommunications service, a local interconnection
arrangement described in s. 364.16, or a network access service
described in s. 364.163.
. . . .
(11) “Service” is to be construed in its broadest and most
inclusive sense.
§ 364.02, Fla. Stat. (2001).  As is evident from these definitions, the Legislature
drafted this statute in a fashion that makes the “nonbasic service” definition
residual, and the statement of meaning of the term “service” extraordinarily
sweeping.
BellSouth contends that this Court should refer to the standard definitions of
the terms “telecommunications” and “service” to ascertain the proper label for its
restructured late payment charge.  Merriam-Webster’s Collegiate Dictionary defines
“telecommunication” as “communication at a distance (as by telephone).” 
Merriam-Webster’s Collegiate Dictionary 1211 (10th ed. 1999).  Additionally,
section 364.02 defines a "telecommunications company" as a business entity
“offering two-way telecommunications service to the public for hire within this state
by the use of a telecommunications facility,” and a "telecommunications facility" as
“real estate, easements, apparatus, property, and routes used and operated to
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provide two-way telecommunications service to the public for hire within this
state.” § 364.02(12)-(13), Fla. Stat. (2001).  The applicable definition of “service,”
as provided by Merriam-Webster’s Dictionary is: “a facility supplying some public
demand.”  Merriam-Webster’s Collegiate Dictionary 1070 (10th ed. 1999).
Additionally, the Company contends that even if the late payment charge is
properly denominated a nonbasic service, it is a new service and thus not subject to
the limitations on fee increases contained in chapter 364.  This argument is based
upon the assertion that BellSouth’s restructuring of its late payment charge in 1999
actually reflects the Company’s lost value during the delinquency of late payments--
an item which has never been included in BellSouth’s charges.  
Consideration of the statutory language at issue, the plain meaning of the
word “service,” and simple logic compel the conclusion that BellSouth’s late
payment charge certainly may not be a “service” in the traditional sense of this
word’s meaning.  Indeed, historically, the fee charged by BellSouth does not, in
actuality, reflect the provision of any additional service to its customers.  Instead, it
is simply a charge for the original service, increased to reflect the passage of time
since payment was originally due to the Company.  However, it has also been
described as a charge for continuing service for delinquent accounts.
Although the late payment charge certainly may not logically fit neatly into the
1.  Indeed, we have concerns over the interaction of the regulatory
framework of chapter 364 and the complex, highly itemized nature of billing in the
telecommunications industry today.  The Legislature would be well advised to
consider this issue to ensure that the original purposes of the law are properly
pursued.
2.  The dissent fails to recognize that the statutory construction issue here
revolves around whether the instant charge is properly included, as provided by
statute, in the "nonbasic service category."   See § 364.02(6), Fla. Stat. (2001). 
Both BellSouth and the PSC have always included this late payment charge in this
statutory category and it certainly does not "defy logic" to conclude that the
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statutory construct of chapter 364,1 we must consider the circumstances
surrounding the Public Service Commission’s determination in the instant case and
the totality of the concepts historically utilized leading into price regulation.  The
record reflects that it has always been the practice of BellSouth to include fees such
as the late payment charge that result from the provision of telecommunications
services as “nonbasic services.”  Indeed, as determined by the PSC in its order
below, BellSouth has represented since 1986 that its late payment charge belongs in
the “miscellaneous basket category of the nonbasic services.”  See Final Order
BellSouth Late Payment Charge Tariff Filing at 9.  It is quite telling that from the
time of legislative enactment of the current price regulation scheme to BellSouth’s
1999 filing of the instant tariff, the Company’s filings and communications with the
PSC have always characterized the late payment charge as a “service” to be
properly included in the nonbasic service category basket.2  Certainly, once a tariff
Commission may properly continue to rely upon this statutory practice and
statutory construction.
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is filed by a carrier and accepted by the Commission, “it has the force and effect of
law.”  Bella Boutique Corp. v. Venezolana Internacional de Aviacion, S.A., 459 So.
2d 440, 441 (Fla. 3d DCA 1984).  A validly filed tariff also “constitutes the
contract of carriage between the parties.”  Id.  Therefore, BellSouth’s
representations to the PSC regarding its tariff, while not tariff filings themselves, are
indicative of a common practice within the telecommunications industry that serves
to explain the PSC’s determination that the newly revised late payment charge is
properly classified as being within the “nonbasic service category” referred to in
section 364.051(5)(a) of the Florida Statutes.
While the statute at issue in the instant case is not a paragon of clarity with
regard to precisely describing operative service categories, it certainly is clear that
the Legislature intended to draft the definition of “service” contained in section
364.02(11) extremely broadly and to apply section 364.051(5)(a) consistently with
the practices historically utilized in the industry.  When faced with a scenario in
which BellSouth, by restructuring its late payment charge, sought to change well-
settled industry practice regarding fees for the provision of telecommunications
services and thereby avoid price-limiting regulation altogether, the PSC relied upon
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industry history in denoting the Company’s late payment charge to be within the
preexisting “nonbasic service category.”  Certainly, we cannot deem the
Commission’s conclusions clearly erroneous.  Indeed, based upon the facts before
the PSC, its determination that “the interest charge is a ‘service’ BellSouth renders
its delinquent customers for carrying their unpaid balances,” is quite logical. 
Logical application of the telecommunications regulatory structure as price
regulation became operative and historical industry practice support the
Commission’s determinations.  Therefore, BellSouth has not overcome the
presumptions accorded to conclusions of the PSC, and we will not disturb the
PSC’s determination that the disputed late payment charge is properly labeled
within the preexisting “nonbasic service category” subject to the limitations of
section 354.051(5)(a) of the Florida Statutes.  If this application is contrary to
legislative design, it is a matter for legislative reconsideration, not judicial rewriting
of the statutory framework.
Conclusion
Because BellSouth has not overcome the presumption of correctness
accorded determinations of the Florida Public Service Commission, the
Commission’s findings and conclusions must stand.  As the Company’s proposed
price increase is above the six percent annual limitation of section 364.051(5)(a), we
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affirm the Commission’s final order.
It is so ordered.
ANSTEAD, C.J., and SHAW, WELLS, and PARIENTE, JJ., concur.
HARDING, Senior Justice, dissents with an opinion, in which QUINCE, J.,
concurs.
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND
IF FILED, DETERMINED.
HARDING, Senior Justice, dissenting.
I respectfully dissent.  I acknowledge that Public Service Commission (PSC)
orders are accorded substantial deference by this Court.  Nevertheless, I believe
that the PSC’s conclusion in this case was clearly erroneous.  Although the term
“service” in section 364.02, Florida Statutes (2001), is “to be construed in its
broadest and most inclusive sense,” it cannot be construed to include something
that is clearly not a “service,” i.e., a carrying charge.  The majority acknowledges
that a “late payment charge certainly may not logically fit neatly into the statutory
construct of chapter 364.”  Majority op. at 8.  Yet the majority defies logic and
concludes otherwise.  In the end, the majority is left to rely on “practices
historically utilized in the industry.”  Majority op. at 9.  By using industry practice
to justify the PSC’s conclusion, the majority adds a new dimension to the
traditional rules of statutory construction, for which it cites no authority.  For all of
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these reasons, I would reverse the decision of the PSC. 
QUINCE, J., concurs.
An Appeal from the Florida Public Service Commission
Stephen H. Grimes of Holland & Knight LLP, Tallahassee, Florida; and Adorno &
Yoss, P.A., Miami, Florida,
for Appellant
Harold McLean, General Counsel, and Richard C. Bellak, Associate General
Counsel, on behalf of Florida Public Service Commission, Tallahassee, Florida;
and Jack Shreve, Public Counsel, and Robert D. Vandiver, Associate Public
Counsel and Stephen M. Presnell, Associate Public Counsel, Tallahassee, Florida,
on behalf of Citizens of the State of Florida,
Appellees